ACCOUNTING 1080-On June 20 2015, Sharper corporation’s common

Subject: Business    / Accounting
Question
On June 20 2015, Sharper corporation’s common stock is priced at $62 per share before any stock dividends or split, and the stockholders’ equity section if its balance sheet appears as follows:

Common stock – $10 par value, 120,000 shares authorized, 50,000 shares issued and outstanding – 500,000

Paid in capital in excess of par value common stock- 200,000

Retained earnings- 660,000

Total stockholders equity- 1,360,000

1. Assume that the company declares and immediately distributes a 50% stock dividend. This event recorded by capitalizing retained earnings equal to the stock’s par value. Answer these questions about stockholders equity as it exists AFTER issuing new shares.

a. what is the retained earning balance?

b. what is the amount of stockholders equity?

c. How many shares are outstanding?

2. Assume that the company implements a 3- for- 2 stock split instead of the stock dividend in part 1. Answer these questions about stockholders equity as it exists AFTER issuing the new shares.

a. What is the retained earning balance?

b. what is the amount of stockholders equity?

c. How many shares are outstanding?

3. Explain the difference, if any, to a stockholder from receiving new shares distributed under a large stock dividend versus a stock split.

The equity section of Cyril Corporation balance sheet is as follows:

Preferred stock- 6% cumulative, $25 par value $30 call price, 10,000 shares issued and outstanding- 250,000

Common stock – $10 par value 80,000 shares issued and outstanding- 800,000

Retained earnings- 535,000

Total Stockholders Equity- 1,585,000

Determine the book value per share of the preferred and common stock under two separate situations.

1. No preferred dividends are in arrears.

2. Three years of preferred dividends are in arrears.