The owners’ equity accounts for Hexagon International are shown here: Common sto
ID: 2577350 • Letter: T
Question
The owners’ equity accounts for Hexagon International are shown here: Common stock ($.60 par value) $ 45,000 Capital surplus 340,000 Retained earnings 748,120 Total owners’ equity $ 1,133,120
a-1. If the company's stock currently sells for $30 per share and a 10 percent stock dividend is declared, how many new shares will be distributed? (Do not round intermediate calculations.) New shares issued
a-2. Show the new equity account balances after the stock dividend is paid. (Do not round intermediate calculations.) Common stock $ Capital surplus Retained earnings Total owners’ equity $
b-1. If the company declared a 20 percent stock dividend, how many new shares will be distributed? (Do not round intermediate calculations.)
New shares issued
b-2. Show the new equity account balances after the stock dividend is paid. (Do not round intermediate calculations.) Common stock $ Capital surplus Retained earnings Total owners’ equity $
Explanation / Answer
a . 1) current no. of equity shares = $ 45000 / $0.60
=75000 shares
new shares outstanding = 75000(1.10) = 82500 shares
New shares issued = 7500 shares
a. 2)
WN :
common stock :- 82500 shares *$0.60 par value = $ 49500
capital surplus:- current capital surplus + new shares issued *(sale value - par value)
= 340000 + 7500 *(30 - 0.60)
=340000 +220500
=$560500
retained earning :- current reatined earning - increase in capital surplus - increase in common stock
= 748120 - 220500 - 4500
=$ 523120
b. 1) current no. of equity shares = $ 45000 / $0.60
=75000 shares
new shares outstanding = 75000(1.20) =90000 shares
New shares issued = 90000 - 75000
=15000 shares
b.2)
WN:
common stock = 90000 shares * 0.60 par value
= $ 54000
capital surplus = 340000 + 15000 new shares * (30 sale value - 0.60 par value )
=340000 + 441000
=$781000
retained earning = current reatined earning - increase in capital surplus - increase in common stock
=748120 - 441000 - 9000
=$298120
common stock 49500 capital surplus 560500 retained earning 523120 total owner's equity $1133120Related Questions
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