Stock Dividends

Stock Dividends - $6,272,000 Other ($195,000) Total...

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Stock Dividends Proportional distribution of shares to stockholders Reasons corporations distribute stock dividends: Provide dividend, yet conserve cash Reduce market price of shares Decrease retained earnings and increase common stock Total equity is unchanged Small Less than 25% of outstanding shares Recorded at market value Large Greater than 25% of outstanding shares Recorded at par value E9-27 10% stock dividend – small: recorded at market value 10% x 500,000 shares issued = 50,000 Market value = $17 per share E9-27 Stockholders' Equity Common stock, $0.10 par, 2,000,000 shares authorized, ___________shares outstanding $55,000 Paid-in capital in excess of par $1,807,000 Retained earnings
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Unformatted text preview: $6,272,000 Other ($195,000) Total stockholders' equity $7,939,000 Stock Splits Increase in shares coupled with a proportionate reduction in par value 2-for-1 split doubles the shares outstanding and halves the par value No entry made Description of stock changed on balance sheet Summary of Transaction Effects Assets = Liabilities + Equity Issue stock Increase No effect Increase Purchase treasury stock Decrease No effect Decrease Sell treasury stock Increase No effect Increase Declare cash dividend No effect Increase Decrease Pay cash dividend Decrease Decrease No effect Stock dividend No effect No effect No effect Stock split No effect No effect No effect...
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Stock Dividends - $6,272,000 Other ($195,000) Total...

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