Common Dividends Thompson Payroll Service began in 2013 with 2,000,000 authorize

Question

Common Dividends

Thompson Payroll Service began in 2013 with 2,000,000 authorized and 450,000 issued and outstanding $7 par common shares. During 2013, Thompson entered into the following transactions:

Declared a $0.25 per-share cash dividend on March 24.

Paid the $0.25 per-share dividend on April 6.

Repurchased 12,600 common shares for the treasury at a cost of $17 each on May 9.

Sold 4,600 unissued common shares for $29 per share on June 19.

Declared a $0.30 per-share cash dividend on August 1.

Paid the $0.30 per-share dividend on September 14.

Declared and paid a 20% stock dividend on October 25 when the market price of the common stock was $26 per share.

Declared a $0.50 per-share cash dividend on November 20.

Paid the $0.50 per-share dividend on December 20.

Required:

1. What is the total dollar amount of dividends (cash and stock) for the year?

2. Determine the effect on total assets and total stockholders' equity of these dividend transactions.

Enter decreases in assets or equity as negative numbers. If a blank does not require an answer or an answer is zero, enter "0".

Effect on Assets Effect on Stockholder's Equity 1 2 3 4 5 6 7 8 9 Total Effect

Explanation / Answer

1. Total Dividend = (450,000 x 0.25) + [(450,000 - 12,600 + 4,600) x 0.30] + [(450,000 - 12,600 + 4,600) x 20% x 7] + [(450,000 - 12,600 + 4,600) x 120% x 0.50] = $11,29,100

Effect on Assets Effect on Stockholder's Equity 1 -$112,500 0 2 0 -$112,500 3 -$214,200 -$214,200 4 $133,400 $133,400 5 -$132,600 0 6 0 -$132,600 7 0 0 8 -$265,200 9 -$265,200 Total Effect -$591,100
-$591,100

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