In: Accounting
Part 3: Dividends and Splits
The Board of Directors of Oriole Company is debating what type...
Part 3: Dividends and Splits
The Board of Directors of Oriole Company is debating what type
of dividend (or stock split) to give its shareholders. The common
stock is currently trading at $34 per share. The following is
Oriole’s current stockholders’ equity:
Common stock, $10 par $ 400,000
Additional paid in capital – common stock 800,000
Retained earnings 1,300,000
Required
Using the above information, show the appropriate journal
entries under each of the following unrelated assumptions:
- Assume the company chooses a cash dividend of $2.50 per
share.
- Assume the company chooses a property dividend. This dividend
will be paid using Oriole’s investment in shares of Blue, Inc.’s
stock. This investment is carried on Oriole’s books at $250,000 and
has a market value of $310,000 on the date of declaration.
- Assume the company chooses a 15% stock dividend.
- Assume the company chooses a 30% stock dividend.
- Assume the company chooses a 3-for-1 stock split.