11 32 41 526 531 Test Yourself Gobble Corp has 300000 shares authorized 200000

11 32 41 526 531 test yourself gobble corp has 300000

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Test Yourself Gobble Corp. has 300,000 shares authorized, 200,000 shares issued, and 20,000 treasury shares. Gobble Corp. declares a $1 per share dividend. What is the total dividend declared?
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No change in total stockholders’ equity. No change in par values. All stockholders retain same percentage ownership. Stock Dividends Corporations issue stock dividends to: Remind stockholders of the accumulating wealth in the company. Reduce the market price per share of stock. Signal that the company expects strong financial performance in the future. Distribution of additional shares of stock to stockholders. 11-34
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Reducing Share Price Before Dividend Share O/S 100,000 x MP per share $1,000 =Total Capital $100,000,000 After a 400,000 stock dividend Shares O/S 500,000 Total Capital $100,000,000 New share price $100,000,000 / 500,000 = $200 per share
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Stock Dividends All Dividends are Distributions of Retained Earnings Stock Dividends Transfer an Amount from Retained Earnings to Contributed Capital No Cash is Involved It Is a Rearrangement of the Components of Stockholders’ Equity The $ Amount Transferred Depends on the Size of the Stock Dividend
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Record at current market value of stock. Record at par value of stock. Small Large The journal entry moves an amount from Retained Earnings to other equity accounts. Stock Dividends Stock dividend > 20 – 25% Stock dividend < 20 – 25% 11-37
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Stock Dividends – Large Dividend XYZ Corporation issued a 100% percent stock dividend on its 100,000 outstanding shares of $1 par value common stock. Market value of the shares issued was $20 per share. 11-38
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Stock Splits An increase in the number of shares and a corresponding decrease in par value per share. Retained earnings is not affected. A stock split creates more pieces of the same pie. Assume that a corporation had 5,000 shares of $1 par value common stock outstanding before a 2–for–1 stock split. 11-39
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Stock Splits An increase in the number of shares and a corresponding decrease in par value per share. Retained earnings is not affected. A stock split creates more pieces of the same pie. Assume that a corporation had 5,000 shares of $1 par value common stock outstanding before a 2–for–1 stock split. Increase Decrease No Change 11-40 No journal entry required – Change par value and number of shares authorized and o utstanding.
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Comparison of Distributions to Stockholders
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In-Class 02
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Learning Objective 11-4 Describe the characteristics of preferred stock and analyze transactions affecting preferred stock.
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Preferred Stock Issuance National Beverage issued 400,000 shares of its $1 par value preferred stock for $19,704,000.
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