Question 1 (15 marks) The Howe Company's stockholders' equity account is as follows:

The earnings available for common stockholders from this period's operations are $100,000, which have been included as part of the $1.5 million retained earnings.

a. What is the maximum dividend per share that the firm can pay? (Assume that legal capital includes all paid-in capital.)

b. If the firm has $130,000 in cash, what is the largest per-share dividend it can pay without borrowing?

c. Indicate the accounts and changes, if any, that will result if the firm pays the dividends indicated in parts a and b.

d. Indicate the effects of an $80,000 cash dividend on stockholders' equity.

Common stock (600,000 shares at $4 par) Paid-in capital in excess of par Retained earnings Total stockholders' equity $2,400,000 4,000,000 1,500,000 $7,900,000