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CH13 Graded Written Homework Problem 1 In some cases, companies elect to pay dividends to stockholders in the form of additio
On February 1, the market price of Cheerios, Inc.s common stock was $9 per share. On February 16, the market price of Cheeri
Cheerios, Inc. had issued stock only one time before the stock dividend described earlier, al price of 57 per share. Cheerios
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Answer #1
Number of Common Shares
Shares Authorized 450,000
Shares Issued 325,000
Shares Outstanding 334,800
Date Account Titles Debit Credit
$ $
Feb 1 Retained Earnings ( 24,800 shares @ $ 9 ) 223,200
Common Stock Dividend Distributable ( 24,800 shares @ $ 2) 49,600
Paid-in Capital in Excess of Par: Common Stock 173,600
Mar 1 Common Stock Dividend Distributable 49,600
Common Stock 49,600
Balance before Stock Dividend Balance after Stock Dividend
Common Stock $ 650,000 $ 699,600
Paid-in Capital in Excess of Par: Common Stock 1,625,000 1,798,600
Retained Earnings 3,000,000 2,776,800
Treasury Stock (60,000) (60,000)
Total Stockholders Equity $ 5,215,000 $ 5,215,000

Cheerios Inc. paid $ 4 per share for the treasury stock.

A stock dividend does not have any effect on the company's total assets.

After the stock dividend, Red would own 13,392 shares, which represents 4 percent  the new total shares outstanding.

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