The owners\' equity accounts for Hexagon International are shown here Common sto

Question

The owners' equity accounts for Hexagon International are shown here Common stock (5.60 par value) Capital surplus Retained earnings 30.000 310,000 688.120 Total owners' equity $1,028,120 a-1. If the company's stock currently sells for $20 per share and a 20 percent stock dividend is declared. how many new shares will be distributed? (Do not round intermediate calculations.) New shares issued 10000 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 36000 504000 448120 Total owners' equity s 1028120 b-1. If the company declared a 25 percent stock dividend, how many new shares will be dis:r buted? (Do not round intermediate calculations.) New shares issued 12500 b-2. Show the new equity account balances after the stock divicend is paid. (Do not round intermediate calculations.) Common stock Capital surplus Retained earnings s37500 552500 Total owners equity

Explanation / Answer

b-2:

Explanation: Common stock = 30,000 (initial balance)+12500*0.6 = 30,000+7500 = 37500

Capital surplus = 310,000 (initial balance)+12500*(20-0.6) = 310,000+242,500 = 552,500

Retained earnings = 688,120 (initial balance) - 12500*20 = 688120-250000 = 438,120

Common stock 37,500.00 Capital surplus 552,500.00 Retained earnings 438,120.00 Total owner's equity 1,028,120.00

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