I am sharing the questions and format for the answers as well.

Background Information: Cipper Corporation is authorized to issue an unlimited

number of no par value common shares, and has $100000$ shares outstanding. The

business has the following balances in its shareholders' equity accounts:

Cipper Corporation Shareholders' Equity

Common Shares $$300000$

Retained Earnings $120000$

Total Equity $$420000$

As you can see, the company has enough in its Retained Earnings account to declare a

dividend. The board of directors has decided to either pay a $$1$ per share cash dividend

or issue one share for every four shares each shareholder owns. The current market

price is $$4$ per share.

Value of Cash Dividend: $100000$ outstanding shares x $$1=$ $$100000$

Value of Stock Dividend: $100000/4$ x $4=25000$ shares @ $$4$ each $=$ $$100000$

What effect does each scenario have on total shareholders' equity?

Cipper Corporation

Shareholders' Equity

Before

Dividend

Cash

Dividend

Stock

Dividend

Common Shares $$300000$ $$300000$ $$300000$

Retained Earnings $12000020000120000$

Total Equity $$420000$ $$320000$ $$420000$

Book Value per share $($Equity$/$#

shares$)$

$$4\mathrm{.}20$ $$3\mathrm{.}20$ $$3\mathrm{.}36$

Required: Assume that you own $800$ shares in Cipper Corporation. Calculate the

dividend you would receive from a cash dividend and from a stock dividend. Record the

journal entries for date of declaration and date of payment for both the cash dividend

and stock dividend.

Show your calculations for each type of dividend. As a shareholder, which would you

prefer? Explain why in as much detail as possible.