Question

MLS had retained earnings of $150,000. The company issued 40,000 shares of poration had $1.000,000 of common stock outstanding Cmmon stock at par on July I and earned net income of $400,000 for the ycar. Jurnalize the declaration of a 15% stock dividend on December 10, 2020, for the following independent at was issucd at l. arid- and Journalize stock dive Anstructions asumptions. a Par value is $10, and market price is $18. A Par value is $5, and market price is $20. ury E144 (LO 1) On October 31, the stockholders' equity section of Heins Company consists of common stock $500,000 and retained earnings $900,000. Heins is considering the following two courses of action: (1) declaring a 5% stock dividend on the 50,000, $10 par value shares outstanding, or (2) effecting a 2-for-I stock split that will reduce par value to $5 per share. The current market price is $14 per share. Compare efects of nda eck split. Instructions Prepare a tabular summary of the effects of the alternative actions on the components of stockholders aquity, outstandiag shares, and par value per share. Use the following column headings: Before Action ury Aier Stock Dividend, and After Stock Split. E JO1) On October 1, Little Bobby Corporation's stockholders' equity is as follows Indicate account stock dividend Common stock, $5 par value Paid-in capital in excess of par-common stock Retained earnings Total stockholders' equity $400,000 25,000 155,000 bos boal $580,000 On October 1, Little Bobby declares and distributes a 10% stock dividend when the market price of the stock is $15 per share. Jo b ad Instructions a. Compute the par value per share (1) before the stock dividend and (2) after the stock dividend. b. Indicate the balances in the three stockholders' equity accounts after the stock dividend shares have been distributed. CERC Indicate the effec equity componer E4.6 (LO 1, 2) During 2020, Roblez Corporation had the following transactions and events. D-par r, the 1. Declared a cash dividend. completed a 2-for-1 stock split in which S10 par value stock was changed to $5 par value stock. 4. Declared a small stock dividend when the market price was higher than par value. - Issued par value common stock for cash at par value. 6. Issued the shares of common stock required by the stock dividend declaration in item no. 4 above. 1. Paid the cash dividend in item no. I above. Made a prior period adiustment for overstatement of net income. 8. Issued par value common stock for cash above par value. Instructions your answer in tabular form with the following columns. Use (1) for increase, (D) for decrease, and (NE) for no effect. Item no. 1 is given as an example. Indicate the effect(s) of each of the foregoing items on the subdivisions of stockholders' equity. Present 317 om- Retained Paid-in Capital Earnings

question 5

Answer 1

Req 1	Before Stock Div	After Stock Div
Common Stock Par Value	400,000	440,000
Number of Common Shares	80,000	88,000
Par value per share	5	5
	=400,000/80,000	=440,000/88,000

Little Bobby Corporation
Stockholders Equity section of Balance Sheet
Stockholders Equity
Common Stock - $5 par value	440,000
Paid in Capital in Excess of Par-Common Stock	105,000
Retained Earnings	35,000
Total Stockholders Equity	580,000

Little Bobby Corporation				-
Date	Account	Debit	Credit	Calculation
1-Oct	Retained Earnings	120,000		=8,000*15
	Common Stock		40,000	=8,000*5
	Paid in Capital in Excess of Par-Common Stock		80,000
	Workings
	Common Stock Par Value	400,000
	Par Value per share	5
	Number of Common Shares - Opening	80,000		=400,000/5
	10% Stock Dividend	8,000		=80,000*10%
	Number of Common Shares Issued	88,000

Little Bobby Corporation T Accounts Date Debit Date Credit Common Stock Op bal $400,000 1-Oct $ 40,000 Date Debit Date Credit Paid in Capital in Excess of Par Value-CS Op bal $ 25,000 1-Oct $ 80,000 $440,000 Bal. $ 105,000 Bal. Retained Earnings 1-Oct $ 120,000 Op bal $ 155,000 Bal. $ 35,000