Smart Mart Inc. is considering one of three options: 

(1) Paying a $0.40 cash dividend, 

(2) Distributing a 5% stock dividend

(3) Effecting a 2-for-1 stock split. 

The current fair value is $14 per share. 

Instructions 

In the chart below, indicate the financial impact on the financial statement items listed of each action under consideration. 

Transcribed Image Text:

Before Action $1,875,000 $ 75,000 1,200,000 600,000 Total shareholders' equity 1,800,000 Total liabilities and shareholders' equity $1,875,000 Number of common shares 60,000 Total assets Total liabilities Common shares Retained earnings (1) After Cash Dividend (2) After Stock Dividend (3) After Stock Split