Murton Industries Limited reported the following information on its recent statement of financial position. Ordinary shares:...
Murton Industries Limited reported the following information on its recent statement of financial position.
Ordinary shares: 75 000 shares issued
What is the effect of a 10 per cent share dividend if the market price of the ordinary shares is $30 per share when the share dividend is declared?
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A share dividend has no impact on any of the shareholders' equity accounts |
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Retained earnings decreases by $225 000 |
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Cash increases $187 500 |
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Total shareholders' equity increases $75 000 |
Homework Answers
Answer : Retained earnings decreases by $225,000
Explanation :
Number of shares distributed = 75,000 * 10 % = 7,500
In case of share dividend , the retained earnings decreases by debiting $225,000 (7500 * $30) & Common stock A/c (with ace value amount) & Paid in capital in excess of par A/c (Market price - Face value) are credited.
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Murton Industries Limited reported the following information on
its recent statement of financial position.
Ordinary shares:...
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