Question

14

Squash Delight Inc. has the following balance sheet:

Assets
  Cash $ 90,000
  Accounts receivable 380,000
  Fixed assets 698,000
     Total assets $ 1,168,000
Liabilities
  Accounts payable $ 328,000
  Notes payable 58,000
  Common stock (120,000 shares @ $4 par) 480,000
  Capital in excess of par 100,000
  Retained earnings 202,000
     Total liabilities & owners' equity $ 1,168,000

The firm’s stock sells for $16 a share.

a. Show the effect on the capital accounts of a two-for-one stock split. (Do not round intermediate calculations and round your answers to the nearest whole dollar.)

Effect of Stock Split Common stock Capital excess of par Retained earnings Total equity

b. Show the effect on the capital accounts of a 10 percent stock dividend. Part b is separate from part a. In part b do not assume the stock split has taken place. (Do not round intermediate calculations and round your answers to the nearest whole dollar.)

Effect of Stock Dividend Common stock Capital excess of par Retained earnings Total equity

Effect of Stock Split Common stock Capital excess of par Retained earnings Total equity
Effect of Stock Dividend Common stock Capital excess of par Retained earnings Total equity
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14 Squash Delight Inc. has the following balance sheet: Assets   Cash $ 90,000   Accounts receivable 380,000   Fixed assets 698,000      Total assets $ 1,168,000 Liabilit...
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