Question
The stockholders' equity section of Calabro, Inc. is as follows: Preferred stock, 7%, $10 par, 1,000 shares authorized, 300 shares issued $ 3,000 Additional paid-in
The stockholders' equity section of Calabro, Inc. is as follows: Preferred stock, 7%, $10 par, 1,000 shares authorized, 300 shares issued $ 3,000 Additional paid-in capitalpreferred 9,000 Common stock, $1 par value, authorized 15,000 shares, issued 4,000 shares 4,000 Additional paid-in capitalcommon 20,000 Retained earnings 50,000 Total contributed capital and retained earnings $86,000 Less: Treasury stock (1,000 common shares at cost ) (6,000) Total stockholders' equity $80,000
The market price of the stock on December 31, 2016, was $8 per share. Answer the following independent questions:
A) Calculate the average amount at which each share of common stock was initially sold. B) What balance will be in the retained earnings account immediately after the declaration of a 2for-1 stock split? C) If a cash dividend of $1 per share was declared to both common and preferred stockholders, what would be the balance in retained earnings immediately after the declaration? D) What balance will be in the retained earnings account immediately after the declaration of a 20% common stock dividend on December 31, 2016?
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