On August 30th, 2020 Tesla Inc. declared a 5-for-1 stock split . Due to the split, the market price per share went from about $1,500 per share down to about $350 per share. From accounting standpoint, there was no need to do adjustment to Common Stock or Paid-in Capital. Thus, Total Equity after the split stayed the same Reason for split: Tesla stated that it executed this 5-for-1 stock split because it wanted to make its shares more available to employees and investors. Tesla offers stock options for employees throughout the entire organization, and for employees who are on the lower levels of the pay scale, it can only mean a few stocks when it trades at $1,400+ per share. If the company can't issue fractional shares, it makes for big rounding differences and a lower price per share will fix that. The split led to decrease in Tesla share price to $350 making the stock affordable for more people. Suppose, that your dearest grandma knowing your passion for technology bought you one Tesla share as a Christmas present in 2019. So, as of December 25, 2019 you became a proud Tesla investor. 3. (0.5 point) On August 30th, 2020, you received a message from Tesla, notifying you that you just become an owner of Tesla shares. 1 a. b. 2 C. 5 d. 50 4. (0.5 point) After the stock split you became an owner of a part of the Tesla company. (Put it differently, was your ownership stake diluted as a result of the stock split?) a. bigger b. smaller c. much smaller d. same (1 point) It is typical for the growing companies such as Amazon, Google, Twitter, Zoom etc. not to share their profits by distributing dividends to shareholders, as they believe that the companies have enough lucrative projects within companies to use cash. Mature companies are known for regular (quarterly) distributions. For example, Southwest Airlines Co is an air carrier based in Dallas, Texas. As of September 2019, it is the largest domestic air carrier in the United States, as measured by the number of domestic originating passengers boarded. In its 10-K (Annual report) for the year ended December 31, 2019, Southwest wrote: During 2019, the Company continued to return value to its Shareholders. The Company returned $2.4 billion to Shareholders through $372 million in dividend payments and $2.0 billion through four separate accelerated share repurchase programs and other open market share repurchases. ... These purchases will be recorded as treasury share repurchases for purposes of calculating earnings per share." How was accounting equation will be impacted by both the dividend declaration and cash a. Assets (cash) decreased, liabilities increased, equity (retained earnings) decreased. b. Assets (cash) increased, liabilities increased, equity (retained earnings) decreased. C. Assets (cash) decreased, liabilities unaffected, equity (retained earnings) decreased. d. Assets (cash) decreased, liabilities unaffected, equity (retained earnings) increased. e. Assets (cash) decreased, liabilities unaffected, equity (retained earnings) increased. 5. (1 point) There are number of reasons, why the companies will buy back its shares. Southwest. bought back shares paying $2.4 billion dollars in its 2019 accounting year. How Southwest Airlines Co. balance sheet was impacted by the common stock buyback? payment? Assets Liabilities Revenue Expense Net Income Stockholders' Equity Additional Retained Paid-in Capital earnings Statement of Cash flow Cash Treasury stock + Notes Common payable Stock =($2.4 billion) | + +($2.4 billion ) + (S2.4 billion) 0 ($2.4 billion) ($2.4 billion) ($2.4 billion) ($2.4 billion) ($2.4 billion) ($2.4 billion) + + + ($2.4 billion ) IFA ($2.4 billion) OA ($2.4 billion) FA [$2.4 billion) FA ($2.4 billion OA-operating activity FA-Financing activity