Oriole Inc is considering one of three options: (1) paying a S0.43 cash dividend, (2) distributing a 6% stock dividend, or (3) effecting a 4-for-1 stock split. The current fair value is $16 per share. Help Oriole decide what to do by completing the following chart (treat each possibility independentiy): Before Action After Cash Dividend After Stock Dividend After Stock Split $1.921,000 Total assets Total $69,000 liabilities Common 1,064,000 shares Retained 788,000 earnings Total shareholders 1.852,000 equity Total liabilities and shareholders $1.921,000 %24 equity Number of common 56,000 shares

Oriole Inc is considering one of three options: (1) paying a S0.43 cash dividend, (2) distributing a 6% stock dividend, or (3) effecting a 4-for-1 stock split. The current fair value is $16 per share. Help Oriole decide what to do by completing the following chart (treat each possibility independentiy): Before Action After Cash Dividend After Stock Dividend After Stock Split $1.921,000 Total assets Total $69,000 liabilities Common 1,064,000 shares Retained 788,000 earnings Total shareholders 1.852,000 equity Total liabilities and shareholders $1.921,000 %24 equity Number of common 56,000 shares

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter16: Retained Earnings And Earnings Per Share

Section: Chapter Questions

Problem 4RE: Use the same facts as in RE 16-3, but instead assume that Pickens declares and issues a 50% stock...

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Alert Companys shareholders equity prior to any of the following events is as follows: The company is considering the following alternative items: 1. An 8% stock dividend on the common stock when it is selling for 30 per share. 2. A 30% stock dividend on the common stock when it is selling for 32 per share. 3. A special stock dividend to common shareholders consisting of 1 share of preferred stock for every 100 shares of common stock. The preferred stock and common stock are selling for 123 and 31 per share, respectively. 4. A 2-for-1 stock split on the common stock, reducing the par value to 5 per share (assume the same date for declaration and issuance). The market price is 30 per share on the common stock. 5. A property dividend to common shareholders consisting of 100 bonds issued by West Company. These bonds are carried on the Alert Company books as an available-for sale investment at a fair value of 48,000 (which is also its cost); it has a current value of 54,000. 6. A cash dividend, consisting of a normal dividend and a liquidating dividend, on both the preferred and the common stock. The 10% preferred dividend includes a 2% liquidating dividend, and the 2.30 per share common dividend includes a 0.30 per share liquidating dividend (separate liquidating dividend contra accounts should be used). Required: For each of the preceding alternative items: 1. Record (a) the journal entry at the date of declaration and (b) the journal entry at the date of issuance. 2. Compute the balances in the shareholders equity accounts immediately after the issuance (any gains or losses are to be reflected in the retained earnings balance; ignore income taxes).
What is the difference between a stock dividend and a stock split? As a stockholder, would you prefer to see your company declare a 100% stock dividend or a 2-for-1 split? Assume that either action is feasible.
Use the same facts as in RE 16-3, but instead assume that Pickens declares and issues a 50% stock dividend when the stock is selling for 30 per share. Prepare the journal entry on the date of declaration to record Pickenss stock dividend.
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Was hoping for clarification about a stock capital concept, assume the following information: A potential investor is interested in buying all the common shares of a private company (ASPE), and becoming the owner. One of the due diligence discovered is: Currently, the company owns both preferred and common shares. There are 500 preferred shares with a cost and redemption value of $10 and $12 per share, respectively, and a 6% mandatory, cumulative dividend yield. These shares will be retained by the current owners of the company. Furthermore, the capital stock currently stated on the financial statements are $55,000 I was wondering, given this information, are there any accounting entries or changes to the SFP that need to be made? From what I know, there should be a dividend payable for the preferred shares. Is there anything else I am missing? Should there be any changes made to the capital stock account? Will this effect the purchase price of company (purchase price is based on net…
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