The howe companys stockholders equity account followscommon

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Reference no: EM13355656

The Howe Company's stockholders' equity account follows:

Common stock (400,000 shares at $4 par)	$1,600,000
Paid-in-capital in excess of par	1,000,000
Retained earnings	1,900,000
Total stockholders' equity	$4,500,000

The earnings available for common stockholders from this period's operations are $100,000, which have been included as part of the $1.9 million retained earnings.

a) What is the maximum dividend per share that the firm can pay? (Assume that legal capital includes all paid-in-capital.)

b) If the firm has $160,000 in cash, what is the largest per-share dividend it can pay without borrowing?

c) Indicate the accounts and changes, if any, that will result if the firm pays the dividends indicated in parts a and b.

d) Indicate the effects of $80,000 cash dividend on stockholders' equity.

Reference no: EM13355656

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