f. Bell Company has 2 million shares of common stock with par of $10. Additional
ID: 2543626 • Letter: F
Question
f. Bell Company has 2 million shares of common stock with par of $10. Additional paid- in capital totals $15 million, and retained earnings is $15 million. The directors declare a 5% stock dividend when the market value is $10. The reduction of retained earnings as a result of the declaration will be
1. $0.
2. $1 million.
3. $800,000.
4. $600,000.
5. None of the above.
g. The stockholders’ equity of Gaffney Company at November 30, 2012, is presented below.
Common stock, par value $5, authorized 200,000 shares, 100,000 shares issued and outstanding Paid-in capital in excess of par Retained earnings
$500,000
100,000
300,000
$900,000
On December 1, 2012, the board of directors of Gaffney Company declared a 5% stock dividend, to be distributed on December 20. The market price of the common stock was $10 on December 1 and $12 on December 20. What is the amount of the change to retained earnings as a result of the declaration and distribution of this stock dividend?
1. $0
2. $40,000
3. $50,000
4. $60,000
5. None of the above.
h. Schroeder Company had 200,000 shares of common stock outstanding with a $2 par value and retained earnings of $90,000. In 2010, earnings per share were $0.50. In 2011, the company split the stock 2 for 1. Which of the following would result from the stock split?
1. Retained earnings will decrease as a result of the stock split.
2. A total of 400,000 shares of common stock will be outstanding.
3. The par value would become $4 par.
4. Retained earnings will increase as a result of the stock split.
5. None of the above.
i. Which of the following is not a category within accumulated other comprehensive income?
1. Foreign currency translation adjustments.
2. Unrealized holding gains and losses on available-for-sale marketable securities.
3. Changes to stockholders’ equity resulting from additional minimum pension
liability.
4. Unrealized gains and losses from derivative instruments.
5. Extraordinary item.
Explanation / Answer
F.
While issuing stock dividends, market value of stock will consider as stock value.
in given case, Bell company issued 100,000 shares (2 Million * 5%) as stock dividend. So, total value of stock dividend will be $1,000,000 (100,000*$10). This amount will reduce from retained earnings as distribution to shareholder by way of dividend.
Please note that, as per chegg guidlines, we need to answer only for 1 question.
So, Answer is 2. 1 Million
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