What effect would option 3 have on the financial statements

Reference no: EM131427308

The December 31, 2011, balances in retained earnings and additional paid-in capital for Railway Shippers Company are $135,000 and $50,000, respectively. Five thousand $10 par value common shares are outstanding with a market value of $85 each. The company's cash position at year-end is lower than usual, so the board of directors is considering issuing a stock dividend instead of the normal cash dividend. They are considering the following options.

a. Prepare the journal entries for Options 1 and 2, and comment on why these alternatives may not be attractive. Why do companies issue stock dividends?

b. What effect would Option 3 have on the financial statements?

c. Why do companies split their stock?

Reference no: EM131427308

Questions Cloud

Blog on data mining : Create a blog on Data Mining and write on any topic of your choice. Share the link with your classmates. You must visit at least two blogs of your classmates, and actually respond to their blogs with not less than 350 words

Will you conduct a test of homogeneity or independence : Will you conduct a test of homogeneity or independence? Why?- Test an appropriate hypothesis.- State your conclusion, including an analysis of differences you find (if any).

Finding the bridges in a graph : Suppose G is a connected graph. An edge e whose removal disconnects the graph is called a bridge. Give a linear-time algorithm for finding the bridges in a graph. Express your solution in prose, not in pseudocode.

Discuss the current practices for end of life : SOC313 :Grandmother Ella has had cancer for years now and has followed alternative remedies from the time she was first diagnosed. Ella had a period of remission; however, the cancer returned and has metastasized to her bones, liver, and lungs. ..

What effect would option 3 have on the financial statements : Prepare the journal entries for Options 1 and 2, and comment on why these alternatives may not be attractive. Why do companies issue stock dividends?

Virtual reality platform : The video about VR and Facebook includes a discussion that virtual reality platform will be a future human computer interface. In terms of user experience, how would you envision the future of Faceboook based on this argument?

Create confidence interval for mean annual rainfall in la : Create a 90% confidence interval for the mean annual rainfall in LA.- If you wanted to estimate the mean annual rainfall with a margin of error of only 2 inches, how many years data would you need?

Contents of the hash table that results : Give the contents of the hash table that results when keys E1 A S1 YQUE2 S2 TION are inserted in that order into an initially empty 13-item hash table using double hashing (use h(k) = k mod 13 for the hash function for the k-th letter of the alpha..

Compute the ratio of contributed capital to earned capital : Comment on the difference between a stock dividend and a stock split.

User Account

All Pages