Determining the Financial Statement Effects of Dividends
Uno Company has outstanding 52,000 shares of $10 par value common stock and 25,000 shares of $20 par value preferred stock (8 percent). On December 1, 2011, the board of directors voted an 8 percent cash dividend on the preferred stock and a 30 percent stock dividend on the common stock. At the date of declaration, the common stock was selling at $35 and the preferred at $20 per share. The dividends are to be paid, or issued, on February 15. 2012. The annual accounting period ends December 31.
Required:
Explain the comparative effects of the two dividends on the assets, liabilities, and stockholders' equity (a) through December 31, 2011, (b) on February 15, 2012, and (c) overall, from December 1, 2011, through February 15, 2012. A schedule similar to the following might be helpful:
| COMPARATIVE EFFECTS EXPLAINED | |
Item | Cash Dividend on Preferred | Stock Dividend on Common |
1. Through December 31, 2011: |
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Assets, etc. |
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