On July 1, Davidson Corporation had the following capital structure Common stock
ID: 2516931 • Letter: O
Question
On July 1, Davidson Corporation had the following capital structure Common stock($4 par Additional paid-in capital Retained earnings Treasury stock 768,000 970,000 770,000 s value) Required Complete the table below for each of the two following independent cases: (Round "Par value per share" answers to 2 decimal places.) Case 1: The board of directors declared and issued a 50 percent stock dividend when the stock was selling at S6 per share Case 2: The board of directors announced a 6-for-5 stock split (i.e., a 20 percent increase in the number of shares). The market price prior to the split was $6 per share Items Stock Dividend Stock and Split Dividend Split Common stock account Par value per share4.00 Shares outstandin Additional paid-in$ 970,000 capital Retained earnings 770,000 Total stockholdersExplanation / Answer
Items Before Dividend & Split Stock Dividend Stock Split Common Stock Account 768,000.00 1,152,000.00 768,000.00 Par Value per Share 4.00 4.00 3.33 Shares Outstanding 192,000.00 288,000.00 230,400.00 ($768,000 / $4) (192,000 Shares + 96,000 Shares) 192,000 shares X 6/5 Additional Paid-in Capital 970,000.00 970,000.00 970,000.00 Retained Earnings 770,000.00 386,000.00 770,000.00 ($770,000 - $384,000) Total Stockholders' Equity 2,508,000.00 2,508,000.00 2,508,000.00 No. of Shares Issued as Stock Dividends = 192,000 Shares X 50% = 96,000 Shares Value of Stock Dividends = 96,000 Shares X $4 = $384,000
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