Textbook Problem

Stock Dividends and Stock Splits

The balance sheet of Castle Corporation includes the following stockholders’ equity section:

Required:

1. Assume that Castle issued 60,000 shares for cash at the inception of the corporation and that no new shares have been issued since. Determine how much cash was received for the shares issued at inception.
2. Assume that Castle issued 30,000 shares for cash at the inception of the corporation and subsequently declared a 2-for-l stock split. Determine how much cash was received for the shares issued at inception.
3. Assume that Castle issued 57,000 shares for cash at the inception of the corporation and that the remaining 3,000 shares were issued as the result of stock dividends when the stock was selling for $53 per share. Determine how much cash was received for the shares issued at inception.