At the quarterly meeting of Tangshan Mining Corporation, held on September 10th,

Question

At the quarterly meeting of Tangshan Mining Corporation, held on September 10th, the directors declared a $1.00 per share dividend for the firm’s 100,000 shares of common stock outstanding. The net effect of declaring and paying this dividend would be to a. increase total assets by $100,000 and decrease stockholders equity by $100,000. b. increase total assets by $100,000 and increase stockholders equity by $100,000. c. decrease total assets by $100,000 and decrease stockholders equity by $100,000. d. decrease total assets by $100,000 and increase stockholders equity by $100,000.

Explanation / Answer

Ans-

d. decrease total assets by $100,000 and increase stockholders equity by $100,000.

Declaring dividend of 100000 shares @ $1.00/share means payment of $100000 dividend from bank decrease $100000 from total assets & increase value of equity shareholder by $100000.

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