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Problem 10-08 A firm has the following balance sheet: Assets Liabilities and Equity Cash $ 25,000...

Problem 10-08

A firm has the following balance sheet:

Assets Liabilities and Equity
Cash $ 25,000 Accounts payable $ 25,000
Accounts receivable 156,000 Long-term debt 103,000
Inventory 79,000 Common stock ($7 par; 21,000
3,000 shares outstanding)
Plant and equipment 190,000 Additional paid-in capital 155,000
Retained earnings 146,000
$450,000 $450,000

  1. Construct a new balance sheet showing the impact of a two-for-one split. If the current market price of the stock is $50, what is the price after the split? Round the par value and the market price after the split to the nearest cent, the number of shares outstanding to the nearest whole number, and the other answers to the nearest dollar.

    Assets Liabilities and Equity
    Cash $   Accounts payable $  
    Accounts receivable $   Long-term debt $  
    Inventory $   Common stock ($   par; $  
    shares outstanding)
    Plant and equipment $   Additional paid-in capital $  
    Retained earnings $  
    $   $  

    Price of the common stock after the split: $  

  2. Construct a new balance sheet showing the impact of a 10 percent stock dividend. After the stock dividend, what is the new price of the common stock? Use the original balance sheet from the problem statement. Round the par value and the market price after the stock dividend to the nearest cent, the number of shares outstanding to the nearest whole number, and the other answers to the nearest dollar.

    Assets Liabilities and Equity
    Cash $   Accounts payable $  
    Accounts receivable $   Long-term debt $  
    Inventory $   Common stock ($   par; $  
    shares outstanding)
    Plant and equipment $   Additional paid-in capital $  
    Retained earnings $  
    $   $  

    Price of the common stock after the stock dividend: $  

Solutions

Expert Solution

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

jeff jeffy answered 4 months ago
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