Question

In: Accounting

The following information is from 2019 statement of stockholders' equity for Katy Inc. Stockholders' equity (in...

The following information is from 2019 statement of stockholders' equity for Katy Inc.

Stockholders' equity (in millions, except shares)

2016

2015

Series A 5.375% mandatory convertible preferred stock

$ 400

$ 400

Common stock, par value $0.01 (128,626,740 shares issued

2019; 128,228,477 shares issued 2018)

1

1

Additional paid-in capital

3,547

3,187

Accumulated other comprehensive income, net of tax

21

19

Accumulated deficit

(1,927

)

(686

)

Total Dynegy stockholders' equity

2,042

2,921

Noncontrolling interest

(3

)

(2

)

Total equity

$2,039

$2,919


Dynegy has 420 million shares of common stock authorized. Assume the following transactions occurred during the 2019.

Mar 10

Declare and pay a cash dividend of $2.00 per share

May 6

Split stock 2-for-1 reducing the par value of the stock to $0.005

Aug 25

Issue a large stock dividend of 80% of the outstanding shares of common stock


Required:

a.

Use the financial statement effects template below to record the three transactions.

b.

How did the cash dividend affect the company's profitability for the year?

c.

What effects does the stock split have on Dynegy's financial statements?

d.

What effects does the stock split have on an individual stockholder?

Balance Sheet

Income Statement

Transaction

Cash

Asset

+

Noncash Assets

=

Liabil-

ities

+

Contrib.

Capital

+

Earned

Capital

Revenues

Expenses

=

Net

Income

Mar 10

=

=

May 6

=

=

Aug 25

=

=

Solutions

Expert Solution


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