Year total dividends 2006 2007 2008 2009 2010 2011

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: shares are held as treasury stock. Thus, only 47,000 shares are eligible to receive a dividend. b. Date of declaration Cash Dividend (–SE) 705,000 Dividend Payable (+L) 705,000 Declared divided. Date of record No journal entry is necessary. Date of payment Dividend Payable (–L) 705,000 Cash (–A) 705,000 Paid dividend. c. Stock Dividend (–SE) Capital, Common Stock (+SE) Declared and issued stock dividend. 235,000a Common Stock (+SE) 47,000b Additional Paid­in 188,000 a $235,000 is calculated as follows: 1. = Number of Shares Outstanding 10% = 47,000 10% = 4,700 Shares 2. Value of Dividend = $50 Fair Market per Share 4,700 Shares to Be Distributed b $47,000 = 4,700 shares to be distributed par value of $10 per share d. Number of Shares to Be Distributed The overall impact of cash dividends is a decline in the Retained Earnings account. Since retained earnings is a part of equity, the debt/equity ratio will increase. Issuance of stock dividends results in no change in the overall stockholders’ equi...
View Full Document

This homework help was uploaded on 03/03/2014 for the course ACCT 5053 taught by Professor Staff during the Fall '08 term at Oklahoma State.

Ask a homework question - tutors are online