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The Western Pipe Company has the following capital section in its balance sheet. Its stock is currently selling for $7 per share. Common stock (30,000 shares at $1 par) $ 30,000 Capital in excess of par 30,000 Retained earnings 150,000 Total equity $ 210,000 The firm intends to first declare a 15 percent stock dividend and then pay a 20-cent cash dividend (which also causes a reduction of retained earnings). Show the capital section of the balance sheet after the first transaction and then after the second transaction.

Western Pipe Co. After Stock Dividend

Common stock

Capital in excess of par

Retained earnings

Total equity

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Western Pipe Co.After Stock Dividend

Common stock

Capital in excess of par

Retained earnings

Total equity

Respuesta :

TomShelby

Answer:

(1)

CS 34,500

Capital in excess of par 57,000

RE 118,500

Total equity  210,000

(2)

CS 34,500

Capital in excess of par 57,000

RE 111,600

Total equity  203,100

Explanation:

(1)

RE 31,500

  Common Stock 4,500

  Capital in excess of par 27,000

(2)

RE 6,900

   Dividends 6,900

34,500 shares outstanding x 0.2 per share = 6,900

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