Question

In: Accounting

Use the following information to answer the next 10 questions: A company with 50,000 authorized shares...

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.

  1. What is the effect of the dividend on Retained Earnings?
    1. Retained earnings decreased
    2. Retained earnings increased
    3. Retained earnings remained the same
    4. None of the above
  1. Refer to the previous question. By what amount did Retained Earnings change, if at all? (If the account balance or amount did not change, state your answer as “$0.”)

  1. What is the effect of the dividend on Common Stock?
    1. Common Stock decreased
    2. Common Stock increased
    3. Common Stock remained the same
    4. None of the above

  1. Refer to the previous question. By what amount did Common Stock change, if at all? (If the account balance or amount did not change, state your answer as “$0.”)
  1. What is the effect of the dividend on Paid-in Capital?
    1. Paid-in Capital decreased
    2. Paid-in Capital increased
    3. Paid-in Capital remained the same
    4. None of the above

  1. Refer to the previous question. By what amount did Paid-in Capital change, if at all? (If the account balance or amount did not change, state your answer as “$0.”)

  1. What is the effect of the dividend on the number of shares outstanding?
    1. The number decreased
    2. The number increased
    3. The number remained the same
    4. None of the above

  1. Refer to the previous question. By what amount did the number of shares outstanding change, if at all? (If the account balance or amount did not change, state your answer as “0.”)
  1. What is the effect of the dividend on total equity and total assets?
    1. Total equity decreased and total assets decreased
    2. Total equity decreased and total assets increased
    3. Total equity increased and total assets decreased
    4. Total equity increased and total assets increased
    5. None of the above

  1. Refer to the previous question. By what amount did total equity and total assets change, if at all? (If the account balance or amount did not change, state your answer as “$0.”)

Solutions

Expert Solution

  • Following Working will help in all the questions asked by you.

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

  • What is the effect of the dividend on Retained Earnings?

Option ‘a’ Retained Earnings Decreased by the amount of Cash Dividend

  • By what amount did Retained Earnings change? Answer = $ 30,000
  • What is the effect of the dividend on Common Stock?

Option ‘d’ None of the above

  • B y what amount did Common Stock change?

Answer = $ 0

  • What is the effect of the dividend on Paid-in Capital?

Option ‘d’ None of the above

  • By what amount did Paid-in Capital change?

Answer = $ 0

  • What is the effect of the dividend on the number of shares outstanding?

Option ‘d’ None of the above

  • By what amount did the number of shares outstanding change?

Answer = 0

  • What is the effect of the dividend on total equity and total assets?

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.

  • By what amount did total equity and total assets change?

Answer = $ 30,000


Related Solutions

Use the following information to answer the next 10 questions: A company with 100,000 authorized shares...
Use the following information to answer the next 10 questions: A company with 100,000 authorized shares of $4 par common stock issued 50,000 shares at $9 per share. Subsequently, the company declared and issued a 10% stock dividend. The market price of the shares is $20 per share. What is the effect of the dividend on Retained Earnings? Retained earnings decreased Retained earnings increased Retained earnings remained the same None of the above Refer to the previous question. By what...
A company with 50,000 authorized shares of $1 par common stock issued 10,000 shares at $10...
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. What is the effect of the dividend on Retained Earnings? Retained earnings decreased Retained earnings increased Retained earnings remained the same None of the above. Refer to the previous question. By what...
i dont know questions 9 and 10 Use the following information to answer the next six...
i dont know questions 9 and 10 Use the following information to answer the next six questions: All balances are as of 12/31/2017 unless specified otherwise. Loss on the Sale of Equipment 62,250 Income Tax Expense 48,750 Short Term Investments 1,500 Inventory 97,500 Retained Earnings, 1/1/17 281,000 Gain on Sale of Equipment 27,500 Goodwill 50,000 Cost of Goods Sold 204,000 Common Stock ??? Notes Payable 5/1/18 12,500 Cash 70,000 Sales Revenue 447,500 Accumulated Depreciation 50,000 Dividends 10,000 Notes Payable, due...
Use the following information to answer the next three questions: The following information is available from...
Use the following information to answer the next three questions: The following information is available from the records of Aggies R Us, Inc. at the end of the 2017 calendar year.  Assume this is Aggies’ 1st year of operation. Accounts Receivable           $102,200        Notes Payable                       $???? Cash                                        70,890              Salary Expense                   320,000 Building                                    75,000           Retained earnings ???? Advertising Expense                60,000             Accounts Payable                  62,800                                    Dividends                                 12,200             Income Tax Expense             23,100 Service Revenues                  460,000             Common Stock                    120,000            Office Equipment                     22,500             Wages Payable                     15,450 Determine Aggies’ Net Income for the year ended December 31, 2017: A. $36,900 B. $80,000 C. $56,900 D. $44,700...
Use the following information to answer the next six questions: Regency Rug Repair Company is trying...
Use the following information to answer the next six questions: Regency Rug Repair Company is trying to decide whether it should relax its credit standards. The firm repairs 72,000 rugs per year at an average price of $132 each. Bad-debt expenses are 1% of sales, the average collection period is 40 days, and the variable cost per unit is $28. Regency expects that if it does relax its credit standards, the average collection period will increase to 48 days and...
Use the following information to answer the next four questions. Your business (US company) will receive...
Use the following information to answer the next four questions. Your business (US company) will receive a payment of 150,000 British pounds. You have decided to fully hedge your company’s foreign exchange risk with futures contracts. Each futures contract for British pounds has an initial margin of $1500 and a maintenance margin of $1100. Each futures contract has 25,000 British pounds attached. You open your position on 11/30/2018 when the futures price was $1.955 per pound. The table below shows...
Use the following information for the next six questions: A firm has 2 million shares of...
Use the following information for the next six questions: A firm has 2 million shares of common stock outstanding, currently selling at $60 per share. It is expected to have EPS and dividends per share at the end of the current year in the amounts of $4 and $2.45, and a Return on Equity of 10%. It also has $100 Million par value of debt on its books, which is currently selling at a 5% discount to par. The debt...
Use the following information for the next four questions: 2017 2018 Beginning Cash Balance 20,000 50,000...
Use the following information for the next four questions: 2017 2018 Beginning Cash Balance 20,000 50,000 Net Income                 65,000.00                 75,000.00 Accounts Receivable                 10,000.00                    6,000.00 Prepaid Insurance                    5,000.00                    3,500.00 Inventory                 20,000.00                 24,000.00 Accounts Payable                    3,000.00                    2,000.00 Unearned Revenue                    5,000.00                    7,000.00 Depreciation Expense                 25,000.00                 20,000.00 Cash Paid for Dividends                 25,000.00                    5,000.00 Cash Payment to Repay Note Payable                               -                    10,000.00 Cash Payment to Purchase Land...
Use the following information to answer the next two questions: Stock                  Amount            &nb
Use the following information to answer the next two questions: Stock                  Amount                       Beta A                         25,000                         0.2 B                         20,000                         1.0 C                         30,000                         1.8 D                         25,000                         1.6 Risk-free rate is 3% and the market risk premium is 8% What is the required return for this portfolio?
Use the following information to answer the next questions: We are interested in whether this age...
Use the following information to answer the next questions: We are interested in whether this age group of males fits the distribution of the U.S. adult population. Calculate the frequency one would expect when surveying 400 people. Observed Values: Never married 150; Married 228; Widowed 5; Divorced/Separated 17 Expected Values follow these proportions: Never married 30%; Married 56%; Widowed 3%; Divorced/Separated 11% What test are you running? What is the observed values for never married? What is the observed values...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT