The stockholders\' equity section of Bramble Corp.\'s balance sheet consists of
ID: 2526863 • Letter: T
Question
The stockholders' equity section of Bramble Corp.'s balance sheet consists of common stock ($8 par) $1,008,000 and retained earnings $460,000. A 15% stock dividend (18,900 shares) is declared when the market price per share is $17. (a) Show the before-and-after effects of the dividend on the components of stockholders' equity. Before Dividend After Dividend Stockholders' Equity Paid-in Capital Common Stock 1008000 Paid-in Capital in Excess of Par Value-Common Stock Total Paid-in Capital Retained Earnings Total Stockholders' Equity (b) Show the before-and-after effects of the dividend on the shares outstanding Before Dividend After Dividend Outstanding sharesExplanation / Answer
ANswer:
A)
Before-and-after effects of the dividend on the components of stockholders’ equity
Before dividend
After dividend
Stockholder equity
Paid in capital
Common stock
1008000
1159200
Paid in capital in excess of par
0
170100
Total pai in capital
1008000
1329300
Retained earnings
460,000
138,700
Total stockholder equity
1,468,000
1,468,000
Working notes for the above answer:
1
After dividend stock
=Prasent share value+ stock issued
=1008000+ 18900*8
=1008000+151200
=1159200
2
Paid in capital in excess of par
=18900*(17-8)
=18900*9
=170,100
3
Retained earning after
=460,000- (18900*17)
=460,000-321300
=138700
_____________________________________
2
1. Before-and-after effects of the dividend on the shares outstanding
Before dividend
After dividend
Otstanding shares
126000
144900
(1008000/8)
(126000 + 18900)
Before dividend
After dividend
Stockholder equity
Paid in capital
Common stock
1008000
1159200
Paid in capital in excess of par
0
170100
Total pai in capital
1008000
1329300
Retained earnings
460,000
138,700
Total stockholder equity
1,468,000
1,468,000
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