Ganache Industries had the following stockholders' equity amounts on June 30, 20X2: Common stock, no-par, 100,000 shares
Question:
Ganache Industries had the following stockholders' equity amounts on June 30, 20X2: Common stock, no-par, 100,000 shares issued. Retained earnings...... Total stockholders' equity.. $ 750,000 790,000 $1,540.000 In the past. Ganache has paid an annual cash dividend of $1.50 per share. Despite the large retained earnings balance, the board of directors wished to conserve cash for expansion. The board delayed the payment of cash dividends and in July distributed a 10% stock divi- dend. During August, the company's cash position improved. The board declared and paid a cash dividend of $1.364 per share in September. Suppose you owned 10.000 shares of Ganache common stock, acquired three years ago, prior to the 10% stock dividend. The market price of the stock was $30 per share before any of these dividends. Required 1. What amount of cash dividends did you receive last year-before the stock dividend? What amount of cash dividends will you receive after the dividend action? 2. How does the stock dividend affect your proportionate ownership in Ganache Industries? Explain. 3. Immediately after the stock dividend was distributed, the market value of Ganache stock decreased from $30 per share to $27.273 per share. Does this decrease represent a loss to you? Explain.
Step by Step Answer:
Accounting
ISBN: 9780130906991
5th Edition
Authors: Charles T. Horngren, Walter T. Harrison, Linda S. Bamber, Betsy Willis, Becky Jones