Recording cash and stock dividends

Assignment Help Accounting Basics

Reference no: EM1364838

The stockholders' equity section of Warm Ways Inc's balance sheet at January 1, 2011, shows:

Preferred dividend, $100 par value, 10% dividend,
50,000 shares issued and outstanding $5,000,000
Common stock, $6 par value, 1 million shares issued
and outstanding 6,000,000
Paid-in capital in excess of par 119,000,000
Retained earnings 50,000,000
Total stockholders' equity $180,000,000

Warm Ways reported net income of $9,250,000 for 2011, declared and paid the preferred stock cash dividend, and declared and paid a $0.25 par share cash dividend on 1 million shares of common stock. The company also declared and paid a 10% stock dividend on its common shares. When the stock dividend was declared, 1 million common shares were outstanding, and the market price of common stock was $135 per share.

1. Prepare journal entries to record the three dividend "events" that took place during 2011.

2. If the company's common stock was value at $135 per share when the stock dividend was declared, what would the stock price be just after the dividend shares were distributed?

Reference no: EM1364838

Questions Cloud

Calculating present and future value : Calculate the present value of a $100 cash flow for the following combinations of discount rates and times and also find future value of a $100 cash flow for the same combinations.

Steps in the contingency planning process : Identify the 7 steps in the contingency planning process, and explain how each step will be addressed for the surgical center.

Explain how could a pr professional for a fast food chain : Explain How could a PR professional for a fast food chain use the FDA report to develop a PR strategy and What would this strategy include and why? Be specific in your recommendations.

Program to compute flow of water flowing through a pipe : Write a program to calculate the volume flow rate in cubic feet per second of water flowing through a pipe of diameter d in inches and a velocity of v feet per second.

Recording cash and stock dividends : Prepare journal entries to record the three dividend "events" that took place during 2011. If the company's common stock was value at $135 per share when the stock dividend was declared, what would the stock price be just after the dividend shares ..

Managing change and setbacks on projects : how might you manage scope creep, or changes to the scope of work?

Status quo of a state-by-state system of licensure : What would be the advantages of maintaining the status quo of a state-by-state system of licensure? What would be the disadvantages?

Express what would be the frequency of vibrations : express what would be the frequency of vibrations.

Interest income and investment : GRP Corporation has $500,000 in a bank account paying 0.35% annual interest. As an alternative to leaving the money in the account, the company is considering investing the entire amount for five years. possible investments have been identified as..

User Account

All Pages