Hayley’s Optical has a stockholders’ equity account as shown below. The firm’s common stock currently sells for $20 per share.
Preferred Stock $500,000
Common Stock (2,000,000 shares @ $1 par) 2,000,000
Paid-in-capital in excess of par 10,000,000
Retained earnings 11,600,000
Total stockholder’s equity $24,100,000
Recast the partial balance sheet (the stockholders’ equity accounts) to show independently a a stock dividend of 5% on the common stock.
he maximum dividend the firm can pay is as follow
$11,600,000/2,000,000 shares
= $ 5.80 Per Share
partial balance sheet (the stockholders’ equity accounts) to show independently a a stock dividend of 5% on the common stock.
| Preferred stock | $500,000 | $500,000 | $500,000 |
| Common stock | $2,000,000 | $2,000,000 | $2,100,000 |
| Paid-in -capital. | $10,000,000 | $10,000,000 | $11,900,000 |
| Retained earnings | $11,600,000 | $8,600,000 | $9,600,000 |
| Total SE | $24,100,000 | $21,100,000 | $24,100,000 |
$2,000,000=
=4,000,000 shares at $0.50 par
= 4,000,000 * 0.50
= $ 2000000
$2,100,000=
=2,100,000 shares at $1 par
= 2,100,000 * 1
= $ 2,100,000
