Question

In: Accounting

On October 31, GRANGER Corporation’s liabilities totalled $201,000. Its shareholders’ equity consisted of 88,900 common shares...

On October 31, GRANGER Corporation’s liabilities totalled $201,000. Its shareholders’ equity consisted of 88,900 common shares issued, $889,000 and retained earnings, $260,000. GRANGER is considering the following three courses of action: (1) paying a $0.50 cash dividend, (2) declaring a 11% stock dividend, or (3) effecting a 3-for-1 stock split. The current market price for its common shares is $15 per share.

Complete the following tabular summary of the effects of the alternative actions on GRANGER’s shareholders’ equity and number of common shares.

(1)             (2)             (3)
Before Action           After Cash Dividend             After Stock Dividend            After Stock Split
Total assets            $1,350,000              $                       $                       $        
Total liabilities               $201,000                $                       $                       $        
Common shares           889,000                                                                  
Retained earnings               260,000                                                                  
Total shareholders' equity              1,149,000                                                                        
Total liabilities and shareholders’ equity              $1,350,000              $                       $                       $        
Number of common shares         88,900

Solutions

Expert Solution

(1) (2) (3)
Before Action After Cash Dividends After Stock Dividend After Stock Split
Total Assets $1,350,000 $1,305,550 $1,350,000 $1,350,000
Total liabilities $201,000 $201,000 $201,000 $201,000
Common shares $889,000 $889,000 $1,035,685 $889,000
Retained earnings $260,000 $215,550 $113,315 $260,000
Total stockholders equity $1,149,000 $1,104,550 $1,149,000 $1,149,000
Total liabilities and shareholders' equity $1,350,000 $1,305,550 $1,350,000 $1,350,000
Number of common shares 88,900 88,900 88,900 266,700

Calculations:

For (1),

Cash dividends = 88,900 x $0.50 = $44,450

Total assets = $1,350,000 - $44,450 cash = $1,305,550

Retained earnings = $260,000 - $44,450 cash dividends = $212,550

For (2),

Stock dividends = 88,900 x 11% x $15 market rate per share = $146,685

Common shares = $889,000 + $146,685 = $1,035,685

Retained earnings = $260,000 - $146,685 = $113,315

For (3),

Number of common shares = 88,900 x 3 = 266,700 shares

ekkarill92 answered 2 years ago
Next > < Previous

Related Solutions

At the beginning of 2021, Saban Corporation’s stockholders’ equity consisted of the following: Common stock, $30...
At the beginning of 2021, Saban Corporation’s stockholders’ equity consisted of the following: Common stock, $30 par value, 50,000 shares authorized, 23,000 shares issued............................................................. $690,000 Paid-In capital in excess of par value common stock.................... 140,000 Retained earnings........................................................................ 130,000 Total stockholders’ equity....................................................... $960,000 1. During the year, the company completed these transactions: June 6 Purchased 2,500 shares of treasury stock at $41 per share. 23 The directors voted a $0.55 per share cash dividend payable on July 25 to the July...
The shareholders’ equity section of Superior Corporation’s balance sheet as of December 31, 2015, is as...
The shareholders’ equity section of Superior Corporation’s balance sheet as of December 31, 2015, is as follows: Shareholders’ Equity Preferred stock, $100 par value; authorized, 300,000 shares; issued, 25,000 shares $2,500,000 Common stock, $5 par value; authorized, 2,000,000 shares; issued, 416,000 shares 2,080,000 Paid-in capital in excess of par—preferred 81,000 Paid-in capital in excess of par—common 806,000 Retained earnings 3,120,000 $8,587,000 The following events occurred during 2016: Jan. 5 8,500 shares of authorized and unissued common stock were sold for...
The shareholders’ equity section of Superior Corporation’s balance sheet as of December 31, 2015, is as...
The shareholders’ equity section of Superior Corporation’s balance sheet as of December 31, 2015, is as follows: Shareholders’ Equity Preferred stock, $100 par value; authorized, 300,000 shares; issued, 32,500 shares $3,250,000 Common stock, $5 par value; authorized, 2,000,000 shares; issued, 442,000 shares 2,210,000 Paid-in capital in excess of par—preferred 87,000 Paid-in capital in excess of par—common 875,000 Retained earnings 2,980,000 The following events occurred during 2016: Jan. 5 10,000 shares of authorized and unissued common stock were sold for $6...
The shareholders’ equity section of Superior Corporation’s balance sheet as of December 31, 2015, is as...
The shareholders’ equity section of Superior Corporation’s balance sheet as of December 31, 2015, is as follows: Shareholders’ Equity Preferred stock, $100 par value; authorized, 300,000 shares; issued, 33,000 shares $3,300,000 Common stock, $5 par value; authorized, 2,000,000 shares; issued, 377,000 shares 1,885,000 Paid-in capital in excess of par—preferred 96,000 Paid-in capital in excess of par—common 825,000 Retained earnings 2,920,000 $9,026,000 The following events occurred during 2016: Jan. 5 10,500 shares of authorized and unissued common stock were sold for...
A company’s shareholders’ equity section at December 31, 20x2 included the following items: Common shares, 101470...
A company’s shareholders’ equity section at December 31, 20x2 included the following items: Common shares, 101470 shares outstanding $681092 The following transactions took place during the year 20x3: February 15 Issued 19446 shares for $170295 cash July 10 Retired 35694 shares for $395937 cash Which of the following would be correct as part of the July 10, 20x3 journal entry to record the retirement of the shares? Select one: a. Debit to Common Shares for $395937 b. No entry will...
National Supply’s shareholders’ equity included the following accounts at December 31, 2020: Shareholders' Equity Common stock,...
National Supply’s shareholders’ equity included the following accounts at December 31, 2020: Shareholders' Equity Common stock, 7 million shares at $1 par $ 7,000,000 Paid-in capital—excess of par 63,000,000 Retained earnings 95,500,000 Required: 1. National Supply reacquired shares of its common stock in two separate transactions and later sold shares. Prepare the entries for each of the transactions under each of two separate assumptions: the shares are (a) retired and (b) accounted for as treasury stock. February 15, 2021 Reacquired...
National Supply’s shareholders’ equity included the following accounts at December 31, 2020: Shareholders' Equity Common stock,...
National Supply’s shareholders’ equity included the following accounts at December 31, 2020: Shareholders' Equity Common stock, 5 million shares at $1 par $ 5,000,000 Paid-in capital—excess of par 30,000,000 Retained earnings 98,500,000 Required: 1. National Supply reacquired shares of its common stock in two separate transactions and later sold shares. Prepare the entries for each of the transactions under each of two separate assumptions: the shares are (a) retired and (b) accounted for as treasury stock. February 15, 2021 Reacquired...
The shareholders' equity accounts of Crane Inc. at December 31, 2020, are as follows: Preferred shares,...
The shareholders' equity accounts of Crane Inc. at December 31, 2020, are as follows: Preferred shares, $3 noncumulative, unlimited number authorized, 2,000 issued $200,000 Common shares, unlimited number authorized, 160,000 issued 800,000 Retained earnings 520,000 Accumulated other comprehensive loss (54,000 ) Crane has a 40% income tax rate. During the following fiscal year, ended December 31, 2021, the company had the following transactions and events: Feb. 1 Repurchased 10,000 common shares for $40,000. July 12 Announced a 2-for-1 preferred stock...
Fictishus Inc. Balance Sheet As of December 31, 2019 ASSETSLIABILITIES AND SHAREHOLDERS EQUITY Current AssetsCurrent Liabilities...
Fictishus Inc. Balance Sheet As of December 31, 2019 ASSETSLIABILITIES AND SHAREHOLDERS EQUITY Current AssetsCurrent Liabilities Cash   600Accounts Payable   800 Accounts Receivable   400Notes Payable   200 Inventory1,400Total Current Liabilities1,000 Investments1,200Long Term Debt2,800 Total Current Assets3,600TOTAL LIABILITIES3,800 Fixed Assets2,200 TOTAL ASSETS5,800Shareholders Equity Common Stock2,000 Select 2019 Income Statement information: Revenue:$8,100 Cost of Goods Sold:$5,400 SG&A Expense:$1,350 Net Income:      $810 What is the current ratio? What are the inventory days or turns (just specify which one)? What are the days receivables? What is the gross...
On October 31, the stockholders’ equity section of Sheridan Company consists of common stock $275,000 and...
On October 31, the stockholders’ equity section of Sheridan Company consists of common stock $275,000 and retained earnings $885,000. Sheridan is considering the following two courses of action: (1) declaring a 4% stock dividend on the 27,500, $10 par value shares outstanding, or (2) effecting a 2-for-1 stock split that will reduce par value to $5 per share. The current market price is $14 per share. Prepare a tabular summary of the effects of the alternative actions on the components...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT