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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Stock Dividend

The balance sheet of Cohen Enterprises includes the following stockholders” equity section:

Chapter 10, Problem 70E, Stock Dividend The balance sheet of Cohen Enterprises includes the following stockholders equity

Required:

  1. On April 15, 2019, when its stock was selling for $18 per share, Cohen Enterprises issued a small stock dividend. After making the journal entry to recognize the stock dividend, Cohen’s total capital stock increased by $270,000. In percentage terms, what was the size of the stock dividend?
  2. Ignoring the small stock dividend discussed in Requirement 1, assume that on June 1, 2019, when its stock was selling for $22 per share, Cohen issued a large stock dividend. After making the journal entry to recognize the stock dividend, Cohen’s retained earnings decreased by $75,000. In percentage terms, what was the size of the stock dividend?

To determine

(a)

Introduction:

Dividend is the amount that is paid to the stockholders’ periodically as a return on their investment in the company. Dividend can be made in two forms, i.e., Cash Dividend and Stock Dividend.

To calculate:

Percent of stock dividend.

Explanation

After stock dividend,

Change in Total stock = $270,000

Market Price per share = $18

No. of shares issued as stock dividend = Change in Total stockMarket Price per share

No. of shares issued as stock dividend = $270,000$18

No

To determine

(b)

Introduction:

Dividend is the amount that is paid to the stockholders’ periodically as a return on their investment in the company. Dividend can be made in two forms, i.e., Cash Dividend and Stock Dividend.

To calculate:

Percent of stock dividend.

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