In: Finance
A firm's balance sheet has the following entries:
What will be each of these balance sheet entries after:
|
a)Stock Split has no effect on equity .the overall effect is that number of shares outstanding gets increased and par value gets decreased.
Cash | 11,000,000 |
Total liabilities | 33,000,000 |
Common stock ($ 1.67 par; 3,600,000 shares outstanding) | 6,000,000 |
Additional paid-in capital | 600,000 |
Retained earnings | 44,000,000 |
#Number of shares outstanding = 1,200,000 *3 = 3,600,000 shares
Par value = 5*1/3 = $ 1.67 per share
b)
Cash [11,000,000-1,800,000] | 9,200,000 |
Total liabilities | 33,000,000 |
Common stock ($ 5 par; 1,200,000 shares outstanding) | 6,000,000 |
Additional paid-in capital | 600,000 |
Retained earnings [44,000,000-1,800,000] | 42,200,000 |
#Cash dividend = 1200000*1.5=1800000
c)
Cash | 11,000,000 |
Total liabilities | 33,000,000 |
Common stock ($ 5 par; 1,380,000 shares outstanding) | 6,900,000 |
Additional paid-in capital [600000+1800000 | 2,400,000 |
Retained earnings [44,000,000-2,700,000] | 41,300,000 |
#Number of shares issued as stock dividend = 1200000*15%= 180000 shares
Number of shares outstanding after stock dividend = 1,200,000 before +180,000 stock dividend = 1380000 shares
Value of stock dividend =180000*15 market price= 2700000
Additional paid in capital increased due to stock dividend : Value of stock dividend -par value of stock dividend
= 2700000- (180000*5)
= 2700000 - 900000
= 1800000