Determining the effect of stock dividends, stock splits, and treasury stock transactions Many types of transactions may affect stockholders’ equity. Identify the effects of the following transactions on total stockholders’ equity. Each transaction is independent. A 10% stock dividend. Before the dividend, 540,000 shares of $1 par value common stock were outstanding; the market value was $9 per share at the time of the dividend. A 2-for-l stock split. Prior to the split, 66,000 shares of $5 par value common stock were outstanding. Purchase of 1,100 shares of $0.50 par treasury stock at $6 per share. Sale of 600 shares of $0.50 par treasury stock for 39 per share. The cost of the treasury stock was $7 per share.

Question

Determining the effect of stock dividends, stock splits, and treasury stock transactions

Many types of transactions may affect stockholders’ equity. Identify the effects of the following transactions on total stockholders’ equity. Each transaction is independent.

  • A 10% stock dividend. Before the dividend, 540,000 shares of $1 par value common stock were outstanding; the market value was $9 per share at the time of the dividend.
  • A 2-for-l stock split. Prior to the split, 66,000 shares of $5 par value common stock were outstanding.
  • Purchase of 1,100 shares of $0.50 par treasury stock at $6 per share.
  • Sale of 600 shares of $0.50 par treasury stock for 39 per share. The cost of the treasury stock was $7 per share.

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