The stockholders equity section of Acerin Moving and Storage Companys balance sheet as of December 31, 2010,

Question:

The stockholders’ equity section of Acerin Moving and Storage Company’s balance sheet as of December 31, 2010, appears below.

Contributed capital

Common stock, $2 par value, 6,000,000 shares

authorized, 1,000,000 shares

issued and outstanding............................................$2,000,000

Additional paid-in capital...............................................800,000

Total contributed capital...........................................$2,800,000

Retained earnings........................................................2,160,000

Total stockholders’ equity.........................................$4,960,000

The company engaged in the following stockholders’ equity transactions during 2010:

Mar. 5 Declared a $0.40 per share cash dividend to be paid on April 6 to stockholders of record on March 20.

20 Date of record.

Apr. 6 Paid the cash dividend.

June 17 Declared a 10 percent stock dividend to be distributed

August 17 to stockholders of record on August 5. The market value of the stock was $14 per share.

Aug. 5 Date of record for the stock dividend.

17 Distributed the stock dividend.

Oct. 2 Split its stock 2 for 1.

Dec. 27 Declared a cash dividend of $0.20 payable January 27, 2011, to stockholders of record on January 14, 2011.

Required

1. Record the 2010 transactions in journal form.

2. Prepare the stockholders’ equity section of Acerin Moving and Storage Company’s balance sheet as of December 31, 2010. Assume net income for the year is $800,000.

3. If you owned some shares of Acerin, would you expect the total value of your shares to go up or down as a result of the stock dividends and stock split? What intangibles might affect the stock value?

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