(d) Carla declares and distributes a property dividend. Carla gives one share of
ID: 2527203 • Letter: #
Question
(d) Carla declares and distributes a property dividend. Carla gives one share of its equity investment (ABC stock) for every two shares of Carla Company stock held. Carla owns 10,900 shares of ABC. ABC is selling for $10 per share on the date the property dividend is declared. (1) Total assets (2) Common stock (3) Paid-in capital in excess of par no effect (4) Retained earnings (5) Total stockholders' equity (e) Carla declares a 3-for-1 stock split and issues new shares (1) Total assets (2) Common stock (3) Paid-in capital in excess of par (4) Retained earnings (5) Total stockholders' equity decrease 10800 no offect $10800 decrease ? 10800Explanation / Answer
Total number of Shares = $ 10,900 Shares Selling price per share= $ 10 Per shares Value of the shares =(10,900 Shares X $ 10) $ 1,09,000 Amount (1) Total assets Decrease $ 1,09,000 (2) Common Stock No Effect $ - (3) Paid in capital in excess of par No Effect $ - (4) Retained Earnings Decrease $ 1,09,000 (5) Total Stockholder's Equity Decrease $ 1,09,000 ('E) Carla Declares a 3 for 1 stock split and issue new sgares Amount (1) Total assets No Effect $ - (2) Common Stock No Effect $ - (3) Paid in capital in excess of par No Effect $ - (4) Retained Earnings Decrease $ - (5) Total Stockholder's Equity Decrease $ - Note: There is no effect of the stock split and issue of a new shares because the stock split is the only split of par value of the shares and increase in number of shares. So there is no effect of stock split on an of the above point
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