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What is the impact of each alternative for the shareholder

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Question - The condensed balance sheet of Blossom Corporation reports the following:

BLOSSOM CORPORATION Balance Sheet (partial) June 30, 2021

Total assets $12,730,000

Liabilities and shareholders' equity

Total liabilities $4,624,000

Shareholders' equity

Common shares, unlimited number authorized, 378,000 issued 2,268,000

Retained earnings 5,838,000

Total shareholders' equity 8,106,000

Total liabilities and shareholders' equity $12,730,000

The market price of the common shares is currently $24 per share. Blossom wants to assess the impact of three possible alternatives on the corporation and its shareholders. The alternatives are:

1. Payment of a $1.49 per share cash dividend

2. Distribution of a 4% stock dividend

3. A 3-for-1 stock split

a. For each alternative, determine the impact on (1) assets, (2) liabilities, (3) common shares, (4) retained earnings, (5) total shareholders' equity, and (6) the number of shares.

b. Assume a Blossom shareholder currently owns 1,000 common shares at a cost of $22,000. What is the impact of each alternative for the shareholder, assuming that the shares' market price changes proportionately with the alternative?

Reference no: EM132609216

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