In: Accounting
Use the following information to answer the next 10 questions:
A company with 50,000 authorized shares of $1 par common stock issued 10,000 shares at $10 per share. Subsequently, the company declared and paid a $3 cash dividend per share. On the date the company declared the dividend, the market price of the shares was $30 per share.
A |
No. of shares outstanding prior to Stock Dividend |
10,000 |
B |
Cash Dividend rate |
$ 3.00 |
C = A x B |
Amount of Cash Dividend |
$ 30,000.00 |
Option ‘a’ Retained Earnings Decreased by the amount of Cash Dividend
Option ‘d’ None of the above
Answer = $ 0
Option ‘d’ None of the above
Answer = $ 0
Option ‘d’ None of the above
Answer = 0
Option ‘a’ Total Equity decreased and total Asset decreased.
This is because retained earning is decreased on Equity side and Cash paid is decreased on Asset side.
Answer = $ 30,000