However the companys credit rating will go down

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Unformatted text preview: ets. In alternatives (2) and (4), the board of directors has proposed circumventing the law and has planned to distribute assets to the stockholders first and then distribute the residual assets, if any, to the creditors. The creditors could sue the company and probably force the stockholders to return the "excess" dividends, which would then be used to satisfy the creditors' claims. ISSUES FOR DISCUSSION ID12–1 a. A 100% stock dividend effectively means that the number of shares will be doubled. Therefore, if 149.5 million shares were outstanding before the stock dividend, then 299 million shares were outstanding after the dividend. b. Stock Dividend (–SE) 149,500a Common Stock (+SE) 149,500 Declared and issued stock dividend. Because the stock dividend can be considered a 2:1 stock split par value for the 149.5 million shares is used. a c. Total Value of Hershey Post dividend Value/Share = Number of Shares Outstanding Market Value per Share = 149.5 Million Shares $46 per share = $6.877 Billion = Total Value of Hershey ÷ Number of Shares Outstanding = $6.877 Billion ÷ 299 Million Shares = $23 per Share d. Prior to the stock dividend, Mr. Jones owned .669% of Hershey (1 million sha...
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