Statement 1-Stock dividends payable account shall be recorded only to the extent of the par value. Statement 2-Treasury shares may be declared as stock dividend. and the amount charged to retaines earnings is the cost of the treasury shares Both statements are true Both statements are false O Only Statement 1 is true O only Statement 2 s true Statement 1- f the stock dividend is not less than 20%, the per value or stated value is capitalzed because this is conceived to materially effect a reducion in the share market value Statement 2-Stock dividend of 20% or more is considered as iarge stock dividend Both statements are true. O Both statements are false O Only statement 1 is true O onty Statement 2 is true

Statement 1-Stock dividends payable account shall be recorded only to the extent of the par value. Statement 2-Treasury shares may be declared as stock dividend. and the amount charged to retaines earnings is the cost of the treasury shares Both statements are true Both statements are false O Only Statement 1 is true O only Statement 2 s true Statement 1- f the stock dividend is not less than 20%, the per value or stated value is capitalzed because this is conceived to materially effect a reducion in the share market value Statement 2-Stock dividend of 20% or more is considered as iarge stock dividend Both statements are true. O Both statements are false O Only statement 1 is true O onty Statement 2 is true

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 5E: Stock Dividend Comparison Although Oriole Company has enough retained earnings legally to declare a...

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The total amount of cash and other assets received by a corporation from the stockholders in exchange for the shares is ________. A. always equal to par value B. referred to as retained earnings C. always below its stated value D. referred to as paid-in capital
Following is the shareholders equity section of All-Wood Doors on a day a. Use the financial statement template below to show the financial statement effects of the following dividend events. (Assume that the events are independent.) (1) Cash dividend declaration and payment of 1 per share (3) Property dividend declaration and payment of shares representing a short-term investment in Screen Products, Ltd., with a fair value of 10,000 (3) 10% stock dividend (4) 100% stock dividend (5) 3-for-1 stock split (6) 1-for-2 reverse stock split b. Which events changed the book value of common equity? Under what conditions will these events lead to future increases and decreases in ROE?
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).
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.
Stock Dividend Comparison Although Oriole Company has enough retained earnings legally to declare a dividend, its working capital is low. The board of directors is considering a stock dividend instead of a cash dividend. The common stock is currently selling at 34 per share. The following is Orioles current shareholders equity: Required: 1. Assuming a 15% stock dividend is declared and issued, prepare the shareholders equity section immediately after the date of issuance. 2. Assuming, instead, that a 30% stock dividend is declared and issued, prepare the shareholders equity section immediately after the date of issuance. 3. Next Level What unusual result do you notice when you compare your answers from Requirement 1 with Requirement 2? From a theoretical standpoint, how might this have been avoided?
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When a stock dividend of less than 20−25% is declared and the market value exceeds the par or stated value of the shares, an amount equal to the market value of the shares to be distributed should be charged (debited) to which of the following accounts? Group of answer choices Stock Dividends Stock Dividends Distributable Paid-In Capital in Excess of Par Capital Stock
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A company declares a 5% stock dividend. The debit to Retained Earnings is anamount equal toa. the market value of the shares to be issued.b. the par value of the shares to be issued.c. the book value of the shares to be issued.d. the excess of the market price over the original issue price of the shares to be issued.