CHAPTER 18: Dividend Policy & Retained Earnings - Sample Question (14 Marks) The Liabilities and Shareholder's Equity section of ABC Corporation's latest annual financial statements looks like this: Liabilities and Equity Accounts payable Notes payable Common stock Retained earnings $150,000 50,000 300,000 500,000 100,000 shares 1,000,000 The firm has earnings per share in the latest year of $0.50 and a price-earnings ratio of 20 times. Required: a. Show the effect on the equity account(s) of a two-for-one stock split. b. Show the effect on the equity account of a 10 percent stock dividend. Part b is separate from part a. In part b, do not assume the stock split has taken place. c. Show the effect on the equity account of a $100,000 cash dividend. Part c is separate from part a and b. In part c, do not assume the stock split or the stock dividend has taken place