Question

A firm's balance sheet has the following entries: Cash $ 6,000,000 Total liabilities 32,000,000 Common stock ($4 par; 2,400,000 shares outstanding) 9,600,000 Additional pald-in capital 3,600,000 Retained earnings 40,000,000 What will be each of these balance sheet entries after: a. a four-for-one stock split? Round the par value to the nearest cent, the number of shares outstanding to the nearest whole number, and the other answers to the nearest dollar Cash $ Total liabilities $ Common stock ($ per; shares outstanding) $ Additional pald-in capital $ Retained earnings $ b. a $1.75 per share cash dividend? Use the original balance sheet from the problem statement. Round the par value to the nearest cent, the number of shares outstanding to the nearest whole number, and the other answers to the nearest dollar. Cash Total liabilities $ Common stock ($ par: shares outstanding) $ Additional paid-in capital $ Retained earnings c. a 5 percent stock dividend (current price of the stock is $12 per share)? Use the original balance sheet from the problem statement. Round the par value to the nearest cent, the number of shares outstanding to the nearest whole number, and the other answers to the nearest dollar. $ $ Cash Total liabilities Common stock ($ Additional paid in capital Retained earnings par; shares outstanding) $ $ $

Answer 1

Solution:

Requirement:a
Cash					$        6,000,000
Total Liabilities					$      32,000,000
Common Stock	$      1	Par;	9,600,000	shares outstanding	$        9,600,000
Additional paid-in capital					$        3,600,000
Retained earnings					$      40,000,000
Requirement:b
Cash [6000000-(2400000*1.75)]					$        1,800,000
Total Liabilities					$      32,000,000
Common Stock	$      4	Par;	2,400,000	shares outstanding	$        9,600,000
Additional paid-in capital					$        3,600,000
Retained earnings [40000000-(2400000*1.75)]					$      35,800,000
Requirement:c
Cash					$        6,000,000
Total Liabilities					$      32,000,000
Common Stock	$      4	Par;	2,520,000	shares outstanding	$      10,080,000
Additional paid-in capital [3600000+(120000*8)]					$        4,560,000
Retained earnings [40000000-(120000*12)]					$      38,560,000