The condensed statement of financial position of Laporte Corporation reports the

Question

The condensed statement of financial position of Laporte Corporation reports the following amounts LAPORTE CORPORATION Statement of Financial Position (partial) June 30, 2015 Total assets Total liabilities Shareholders' equity $16,152,300 $6,040,300 Common shares, unlimited number authorized, 416,200 issued $2,081,000 Retained earnings 8,031,000 10,112,000 $16,152,300 Total liabilities and shareholders' equity The common shares are currently trading for $27 per share. Laporte wants to assess the impact of three possible alternatives 1. Payment of a $1.50 per share cash dividend 2. Distribution of a 4% stock dividend 3. A 3-for-2 stock split Determine the impact of each of the above alternative on each of the following Cash Dividend Stock Dividend Stock Split (1) Assets (2) Liabilities (3) Common shares (4) Retained earnings (5) Total shareholders' equity (6) Number of shares

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Cash Dividend Stock Dividend Stock Split Impact Working Impact Working Impact Working Asset -624300 Cash Paid hence reduced asset No Impact No Impact Liabilities No Impact No Impact No Impact Common Share No Impact 449496 Will increase No Impact Retained Earning -624300 Retained earning will decrease because dividend paid out of RE -449496 Will decrease No Impact Total Shareholder Equity -624300 Will decrease since Retained Earnign decreased -449496 Will decrease since Retained Earnign decreased No Impact Number of Share No Impact 16648 Will increase (416200+4%) 624300 Will increase (416200*3/2) Journal: Retained Earning Debit 624300 416200*4%*27 per share 449496 No Journal Cash Credit (416200*1.5) 624300 Common Share Credit 449496

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