Cash versus stock dividend Manama Tool has the following stockholders' equity account. The firm's common stock currently

Question:

Cash versus stock Manama Tool has the following stockholders' equity account. The firm's currently sells for US$4 per share.
Preferred stock.........................................US$ 100,000
Common stock (400,000 shares at US$1 par)............400,000
Paid in capital in excess of par.............................200,000
Retained earnings............................................320,000
Total stockholders' equity............................US$1020000
a. Show the effects on the firm of a cash of US$0.01, US$0.05, US$0.10, and US$0.20 per share.
b. Show the effects on the firm of a 1 percent, 5 percent, 10 percent, and 20 percent stock
c. Compare the effects in parts a and b. What are the significant differences between the two methods of paying dividends?
Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...