Solution-Show effect on capital accounts of a two-for-one

Show effect on capital accounts of a two-for-one stock split

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Reference no: EM131229048

Squash Delight Inc. has the following balance sheet:

Assets
Cash	45,000
Accounts receivable	295,000
Fixed assets	772,000
Total assets	1,112,000
Liabilities
Accounts payable	296,000
Notes payable	54,000
Common stock (100,000 shares @ $2 par)	200,000
Capital in excess of par	100,000
Retained earnings	462,000
Total liabilities & owners' equity	1,112,000

The firm's stock sells for $14 a share.

a. Show the effect on the capital accounts of a two-for-one stock split.

b. Show the effect on the capital accounts of a 10 percent stock dividend. Part b is separate from part a. In part b do not assume the stock split has taken place.

c. Based on the balance in retained earnings, which of the two dividend plans is more restrictive on future cash dividends?

Reference no: EM131229048

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Show effect on capital accounts of a two-for-one stock split

Reference no: EM131229048

Reference no: EM131229048

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