Question
The condensed balance sheet ofCraneCorporation reports the following: CRANECORPORATION Balance Sheet (partial) June 30, 2021 Total assets $11,530,000 Liabilities and shareholders' equity Total liabilities $3,340,000
The condensed balance sheet ofCraneCorporation reports the following:
CRANECORPORATION
Balance Sheet (partial)
June 30, 2021
Total assets $11,530,000
Liabilities and shareholders' equity
Total liabilities $3,340,000
Shareholders' equity
Common shares, unlimited
number authorized,396,000issued 1,980,000
Retained earnings 6,210,000
Total shareholders' equity 8,190,000
Total liabilities and shareholders' equity
$11,530,000
The market price of the common shares is currently $18per share.Cranewants to assess the impact of three possible alternatives on the corporation and its shareholders. The alternatives are:
1.
Payment of a $1.35per share cash dividend
2.
Distribution of a5% stock dividend
3.
A3-for-1stock split
For each alternative, determine the impact on (1) assets, (2) liabilities, (3) common shares, (4) retained earnings, (5) total shareholders' equity, and (6) the number of shares.
Cash Dividend Stock Dividend3-for-1Stock Split
(1)
Assets $
Decreased
No Effect
Increased
Decreased
Increased
No Effect
$
Decreased
No Effect
Increased
(2)
Liabilities
$
Increased
No Effect
Decreased
$
No Effect
Increased
Decreased
$
Increased
No Effect
Decreased
(3)
Common shares
$
Decreased
No Effect
Increased
$
No Effect
Increased
Decreased
$
No Effect
Decreased
Increased
(4)
Retained earnings
$
Decreased
No Effect
Increased
$
Decreased
No Effect
Increased
$
Increased
No Effect
Decreased
(5)
Total shareholders' equity
$
No Effect
Increased
Decreased
$
Decreased
No Effect
Increased
$
Decreased
No Effect
Increased
(6)
Number of shares
Decreased
No Effect
Increased
Decreased
No Effect
Increased
Assume aCraneshareholder currently owns1,000common shares at a cost of $16,000. What is the impact of each alternative for the shareholder, assuming that the shares' market price changes proportionately with the alternative?(Round intermediate per share calculations to 4 decimal places, e.g. 15.1387 and final answers to 0 decimal places, e.g. 5,275.)
Shares' market price
1.Cash dividend
$
2.Stock Dividend
$
3.Stock Split
$
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored 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
Core Concepts Of Accounting
Authors: Leslie Breitner, Robert Anthony
11th Edition
0133125947, 9780133125948
