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Exercise 10-72 (Algorithmic) Stock Dividends and Stock Splits The balance sheet of Castle Corporation includes the following stockholders' equity section: Common stock, $2 par, 50,000

  1. Exercise 10-72 (Algorithmic) Stock Dividends and Stock Splits

    The balance sheet of Castle Corporation includes the following stockholders' equity section:

    Common stock, $2 par, 50,000 shares authorized, 30,000 shares issued and outstanding $ 60,000
    Additional paid-in capital--Common Stock 67,600
    Total capital stock $127,600
    Retained earnings 73,000
    Total equity $200,600

    Required:

    1. Assume that Castle issued 30,000 shares for cash at the inception of the corporation and that no new shares have been issued since. Determine how much cash was received for the shares issued at inception. $

    2. Assume that Castle issued 15,000 shares for cash at the inception of the corporation and subsequently declared a 2-for-1 stock split. Determine how much cash was received for the shares issued at inception. $

    3. Assume that Castle issued 25,000 shares for cash at the inception of the corporation and that the remaining 5,000 shares were issued as the result of stock dividends that capitalized retained earnings of $21,600. Determine how much cash was received for the shares issued at inception. $

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