Question

In: Finance

The current stockholders’ equity on the balance sheet of Garrison Corporation, a distributor of prefabricated cabinets,...

The current stockholders’ equity on the balance sheet of Garrison Corporation, a distributor of prefabricated cabinets, is as shown in the following accounts. Preferred stock $300,000 Common stock (100,000 shares @ $4 par) 400,000 Paid-in capital in excess of par 600,000 Retained earnings 700,000 Total stockholders’ equity $2,000,000 Garrison declares a 10% stock dividend when the market price of its stock is $15 per share. The resulting account balances are as follows:

Solutions

Expert Solution

Before stock dividend:

Number of shares outstanding = 100,000

Number of shares issued as dividend = 10% * Number of shares outstanding
Number of shares issued as dividend = 10% * 100,000
Number of shares issued as dividend = 10,000

After stock dividend:

Increase in common stock = Number of shares issued as dividend * Par value per share
Increase in common stock = 10,000 * $4.00
Increase in common stock = $40,000

Decrease in retained earnings = Number of shares issued as dividend * Market price per share
Decrease in retained earnings = 10,000 * $15
Decrease in retained earnings = $150,000

Increase in paid-in capital in excess of par = Decrease in retained earnings - Increase in common stock
Increase in paid-in capital in excess of par = $150,000 - $40,000
Increase in paid-in capital in excess of par = $110,000

jeff jeffy answered 5 months ago
Next > < Previous

Related Solutions

Stockholders’ Equity: Transactions and Balance Sheet Presentation The stockholders’ equity of Summit Corporation at January 1...
Stockholders’ Equity: Transactions and Balance Sheet Presentation The stockholders’ equity of Summit Corporation at January 1 follows: 7 Percent preferred stock, $100 par value, 20,000 shares authorized; 5,000 shares issued and outstanding $500,000 Common stock, $15 par value, 100,000 shares authorized; 40,000 shares issued and outstanding 600,000 Paid-in capital in excess of par value-Preferred stock 24,000 Paid-in capital in excess of par value-Common stock 360,000 Retained earnings 325,000 Total Stockholders' Equity $1,809,000 The following transactions, among others, occurred during the...
Stockholders’ Equity: Transactions and Balance Sheet Presentation The stockholders’ equity of Summit Corporation at January 1...
Stockholders’ Equity: Transactions and Balance Sheet Presentation The stockholders’ equity of Summit Corporation at January 1 follows: 7 Percent preferred stock, $100 par value, 20,000 shares authorized; 5,000 shares issued and outstanding $500,000 Common stock, $15 par value, 100,000 shares authorized; 40,000 shares issued and outstanding 600,000 Paid-in capital in excess of par value-Preferred stock 24,000 Paid-in capital in excess of par value-Common stock 360,000 Retained earnings 325,000 Total Stockholders' Equity $1,809,000 The following transactions, among others, occurred during the...
The stockholders’ equity section on the December 31, 2014, balance sheet of American Corporation follows: Stockholders’...
The stockholders’ equity section on the December 31, 2014, balance sheet of American Corporation follows: Stockholders’ Equity Contributed capital    Preferred stock (par $21; authorized 17,000 shares, ? issued,      of which 700 shares are held as treasury stock) $ 126,000    Common stock (no-par; authorized 24,000 shares, issued       and outstanding 9,000 shares) 801,000    Contributed capital (includes $3,000 from treasury      stock transactions) 15,000 Retained earnings 48,000 Cost of treasury stock, preferred (16,800 ) Required: 1. Calculate the number of shares of preferred stock...
A portion of the stockholders’ equity section from the balance sheet of Walland Corporation appears as...
A portion of the stockholders’ equity section from the balance sheet of Walland Corporation appears as follows. Notice that the company has two classes of preferred stock with different features, in addition to common stock. Stockholders' equity: Preferred stock, 8% cumulative, $50 par, 40,000 shares authorized, issued, and outstanding $ 2,000,000 Preferred stock, 12% noncumulative, $100 par, 8,000 shares authorized, issued, and outstanding 800,000 Common stock, $5 par, 400,000 shares authorized, issued, and outstanding 2,000,000 Total paid-in capital $ 4,800,000...
The Stockholders’ Equity section of the balance sheet of Willy Corporation on January 1, 2016, is...
The Stockholders’ Equity section of the balance sheet of Willy Corporation on January 1, 2016, is shown below; selected transactions for the year follow: Stockholders’ Equity   Preferred Stock (10% cumulative, $10 par value,          200,000 shares authorized)      Issued and Outstanding, 7,300 Shares $ 73,000      Paid-in Capital in Excess of Par Value 7,300 $ 80,300   Common Stock (no-par value, $50 stated value,        130,000 shares authorized)      Issued and Outstanding, 1,300 Shares 65,000      Paid-in Capital in Excess of Stated Value 2,600 67,600   Total...
Analysis of Stockholders' Equity The Stockholders' Equity section of the December 31, 2017, balance sheet of...
Analysis of Stockholders' Equity The Stockholders' Equity section of the December 31, 2017, balance sheet of Eldon Company appeared as follows: Preferred stock, $40 par value, 5,000 shares authorized, ? shares issued $200,000 Common stock, ? par, 10,000 shares authorized, 10,000 shares issued 100,000 Additional paid-in capital—Preferred 9,000 Additional paid-in capital—Common 800,000 Additional paid-in capital—Treasury stock 2,000 Total contributed capital $1,111,000 Retained earnings 39,000 Treasury stock, preferred, 100 shares (3,300) Total stockholders’ equity $ ? Required: Determine the following items...
EQUITY Thomas' Corporation had the following stockholders’ equity information from the balance sheet for year ending...
EQUITY Thomas' Corporation had the following stockholders’ equity information from the balance sheet for year ending 12/31/2018. Preferred Stock - $50 par value, 10% cumulative, 10,000 shares authorized, 4,000 shares issued Treasury Stock on Preferred $50 par value, 10% cumulative 1000 shares, company paid $150,000 for the Treasury Stock Common Stock - $2 par value, 1,000,000 shares authorized, 60,000 shares issued Capital Excess of Par $480,000 Treasury Stock on Common 8,000 shares, company paid $160,000 for the Treasury Stock Retained...
The stockholders' equity section on the December 31 balance sheet of Chemfast Corporation reported the following...
The stockholders' equity section on the December 31 balance sheet of Chemfast Corporation reported the following amounts: Contributed Capital Preferred Stock (par $20; authorized 10,000 shares, ? issued, of which 1,000 shares are held as treasury stock) $ 116,000 Additional Paid-in Capital, Preferred 17,690 Common Stock (no-par; authorized 20,000 shares, issued and outstanding 6,600 shares) 699,600 Retained Earnings 36,000 Treasury Stock, 1,000 Preferred shares at cost 9,800 Assume that no shares of treasury stock have been sold in the past....
The Stockholders’ Equity section of the Balance Sheet of Carpenter Corporation on December 31, 2015, showed...
The Stockholders’ Equity section of the Balance Sheet of Carpenter Corporation on December 31, 2015, showed Cumulative Preferred 9% Stock, $45 par (1,303 shares authorized, 550 shares issued); Common Stock, $23 par (28,910 shares authorized, 14,910 shares issued); and Retained Earnings of $1,074. The Notes to the Financial Statements in the Annual Corporate Report for 2015 indicate that the market values of the stock are $40 per share (Cumulative Preferred) and $17 per share (Common). Forecasts in the Annual Report...
Stockholders’ Equity: Transactions and Balance Sheet Presentation Torey Corporation was organized on April 1, with an...
Stockholders’ Equity: Transactions and Balance Sheet Presentation Torey Corporation was organized on April 1, with an authorization of 25,000 shares of six percent, $50 par value preferred stock and 200,000 shares of $5 par value common stock. During April, the following transactions affecting stockholders’ equity occurred: Apr. 1 Issued 80,000 shares of common stock at $40 cash per share. 3 Issued 2,000 shares of common stock to attorneys and promoters in exchange for their services in organizing the corporation. The...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT