Answered step by step
Verified Expert Solution
Question
1 Approved Answer
On October 31, Lynch Corporation's liabilities totalled $211,000. Its shareholders' equity consisted of 85,000 common shares issued for $850,000 and retained earnings, $227,000. Lynch is
On October 31, Lynch Corporation's liabilities totalled $211,000. Its shareholders' equity consisted of 85,000 common shares issued for $850,000 and retained earnings, $227,000. Lynch is considering the following three courses of action: (1) paying a $0.65 cash dividend, (2) declaring a 10% stock dividend, or (3) effecting a 3-for-1 stock split. The current market price of Lynch's common shares is $16 per share Complete the following tabular summary of the effects of the alternative actions on Lynch's shareholders' equity and number of shares. Before Action (1) After Cash Dividend (2) After Stock Dividend (3) After Stock Split Total assets $1,288,000 $ $ Total liabilities $211,000 $ $ $ Common shares 850.000 Retained earnings 227,000 Total shareholders' equity 1,077,000 Total liabilities and shareholders equity $1.288,000 $ $ $ Number of common shares 85,000
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started