Paper , Order, or Assignment Requirements
14.
value:
2.00 points
| Squash Delight Inc. has the following balance sheet: |
| |
|
|
| Assets |
| Cash |
$ |
45,000 |
| Accounts receivable |
|
295,000 |
| Fixed assets |
|
772,000 |
| |
|
|
| Total assets |
$ |
1,112,000 |
| |
|
|
| Liabilities |
| Accounts payable |
$ |
296,000 |
| Notes payable |
|
54,000 |
| Common stock (100,000 shares @ $2 par) |
|
200,000 |
| Capital in excess of par |
|
100,000 |
| Retained earnings |
|
462,000 |
| |
|
|
| Total liabilities & owners’ equity |
$ |
1,112,000 |
| |
|
|
|
| The firm’s stock sells for $14 a share. |
| a. |
Show the effect on the capital accounts of a two-for-one stock split. (Do not round intermediate calculations and round your answers to the nearest whole dollar.) |
| |
|
| Common stock |
$ |
|
| Capital excess of par |
$ |
|
| Retained earnings |
$ |
|
| |
|
|
| Total equity |
$ |
|
| |
|
|
|
| b. |
Show the effect on the capital accounts of a 10 percent stock dividend. Part b is separate from part a. In part b do not assume the stock split has taken place. (Do not round intermediate calculations and round your answers to the nearest whole dollar.) |
| |
|
| Common stock |
$ |
|
| Capital excess of par |
$ |
|
| Retained earnings |
$ |
|
| |
|
|
| Total equity |
$ |
|
| |
|
|
|
| c. |
Based on the balance in retained earnings, which of the two dividend plans is more restrictive on future cash dividends? |
| |
|
| |
|
Stock split |
|
Stock dividend |
|
