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Squash Delight Inc. has the following balance sheet: Assets   Cash $ 30,000   Accounts receivable 350,000   Fixed...

Squash Delight Inc. has the following balance sheet:

Assets
  Cash $ 30,000
  Accounts receivable 350,000
  Fixed assets 980,000
     Total assets $ 1,360,000
Liabilities
  Accounts payable $ 295,000
  Notes payable 55,000
  Common stock (100,000 shares @ $4 par) 400,000
  Capital in excess of par 100,000
  Retained earnings 510,000
     Total liabilities & owners' equity $ 1,360,000

The firm’s stock sells for $12 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.)
  


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.)

c. Based on the balance in retained earnings, which of the two dividend plans is more restrictive on future cash dividends?

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jeff jeffy answered 2 years ago
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