Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The Getex Corporation is a manufacturing company that produced digital board and IT component. Mr Haris the Chief Financial Officer (CFO) has been instructed by

image text in transcribed
image text in transcribed
The Getex Corporation is a manufacturing company that produced digital board and IT component. Mr Haris the Chief Financial Officer (CFO) has been instructed by the CEO to prepare year-end dividend planning and will be presented during the annual meeting. Mr Haris need to prepare a few options either the company need to declare stock dividend or stock split. As a finance executive, you need to prepare this planning and present to Mr Haris. The following data represent equity accounts for the Getex Corporation; Common stock (RM2 par value,30,000 units) Capital surplus Retained earnings Total owners' equity RM 60,000 285,000 649,180 994.180 Required: a) The stock currently sells for RM30 per share and if 10 percent stock dividend is declared, how many new shares will be distributed? Show how the equity accounts would change. (5 marks) (CLO2:PLO2:C2) b) If Getex declared a 25 percent stock dividend, how would the accounts change? (4 marks) (CLO2:PLO2:C2) Required: a) The stock currently sells for RM30 per share and if 10 percent stock dividend is declared, how many new shares will be distributed? Show how the equity accounts would change. (5 marks) (CLO2:PLO2:C2) b) If Getex declared a 25 percent stock dividend, how would the accounts change? (4 marks) (CLO2:PLO2:02) c) Getex declares a four-for-one stock split. How many shares are outstanding now? Determine the new par value per share. Show how the equity accounts would change. (3 marks) (CLO2:PLO2:03) d) Getex declares a one-for-five reverse stock split. How many shares are outstanding now? What is the new par value per share? (3 marks) (CLO2:PLO2:C2) e) Provides THREE (3) reasons why Getex should pay its shareholders higher dividend although the firm need to issue more stocks to finance the dividend payments. (4 marks) (CLO2:PLO2:C2)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Issues In Management Accounting

Authors: David Ashton

2nd Edition

0131892509, 978-0131892507

More Books

Students also viewed these Accounting questions