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The Shareholders Equity section the balance sheet of Chequessett Corporation is presented in the following table. Shareholders' Equity Preferred Stock, $25 par, 4.8%, cumulative, nonparticipating,
The Shareholder’s Equity section the balance sheet of Chequessett Corporation is presented in the following table.
Shareholders' Equity | |
Preferred Stock, $25 par, 4.8%, cumulative, nonparticipating, 10,000 shares issued and outstanding | $250,000 |
Common Stock, $1 Par, 500,000 shares issued and outstanding | 500,000 |
Paid-in Capital in Excess of Par - Preferred | 25,000 |
Paid-in Capital in Excess of Par - Common | 2,785,000 |
Retained Earnings | 12,700,000 |
Total Shareholders' Equity | $16,260,000 |
Instructions
Answer the following questions. Show supporting calculations.
- Chequessett’s Board of Directors declared $750,000 in total dividends to be paid. Assuming that no dividends were declared or paid in the prior two years, calculate the amounts that will be paid to common and to preferred.
- Chequessett’s Board of Directors declared a 12% stock dividend on the common stock when the stock was trading at $12 per share. Calculate the net effect on retained earnings as a result of the dividend declaration.
- Chequessett’s Board of Directors declared a 4-for-1 traditional stock split on the common stock when the stock was trading at $10.50 per share. What is the par value per share after the stock split?
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