Analyzing Stock Dividends
At the beginning of the year, the stockholders' equity section of the balance sheet of Solutions Corporation reflected the following:
Common stock (par $12; authorized 65,000 shares, outstanding 30.000 shares) | $360,000 |
Capital in excess of par | 120,000 |
Retained earnings | 736,000 |
On February 1, 2011, the board of directors declared a 60 percent stock dividend to be issued April 30, 2011. The market value of the stock on February 1, 2011, was $15 per share.
Required:
1. For comparative purposes, prepare the Stockholders' Equity section of the balance sheet (a) immediately before the stock dividend and (b) immediately after the stock dividend. (Hint: Use two amount columns for this requirement.)
2. Explain the effects of this stock dividend on assets, liabilities, and stockholders' equity.
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