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# Somecompaniestakegreatprideinbeingabletopromotethecomp

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Unformatted text preview: standing. E12–14 Concluded e. Ratio = (Common Stk. + Additional Paid­In Capital – Treasury Stock) ÷ Retained Earnings Prior to entries (\$60,000 + \$100,000 – \$24,000) ÷ \$60,000 = 2.27 After (a) [(\$60,000 + \$960) + (\$100,000 + \$10,240) – \$24,000] ÷ (\$60,000 – \$11,200) = 3.02 After (b) (\$60,000 + \$100,000 – \$24,000) ÷ \$60,000 = 2.27 After (c) [(\$60,000 + \$4,800) + (\$100,000 + \$59,200) – \$24,000] ÷ (\$60,000 – \$64,000) = .00* After (d) (\$60,000 + \$100,000 – \$24,000) ÷ \$60,000 = 2.27 * Since retained earnings account is –\$4,000, no ratio can be computed. In a stock split the number of outstanding shares is simply “split” into smaller units, which require the corporation to distribute additional shares. However, in a stock dividend additional shares, usually expressed as a percentage of the outstanding shares, are issued to stockholders. Large stock dividends have essentially the same effect as stock splits. E12–15 a. Option 1 Stock Dividend (–SE) 42,500 Common Stock (+SE) Additional Paid­In Capital, Common Stock (+SE) 5,000 3...
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