Answered: he shareholders’ equity of Raven…

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter11: Stockholders' Equity

Section: Chapter Questions

Problem 11.1E

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Question

The shareholders’ equity of Raven Company is as shown:

RAVEN COMPANY

Partial Balance Sheet

1	Common stock, $10 par	$300,000.00
2	Additional paid-in capital on common stock	200,000.00
3	Retained earnings	200,000.00
4		$700,000.00

Raven is considering the declaration and issuance of a stock dividend at a time when the market price is $20 per share.

Required:

1.	Assuming the board of directors recommends a 6% stock dividend, prepare:
a.	the journal entry at the date of declaration
b.	the journal entry at the date of issuance
c.	shareholders’ equity after the issuance
2.	Assuming, instead, that a 40% stock dividend is recommended, answer a, b, and c of Requirement 1.

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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