Question
The Western Pipe Company has the following capital section in its balance sheet. Its stock is currently selling for $7 per share. Common stock (30,000
The Western Pipe Company has the following capital section in its balance sheet. Its stock is currently selling for $7 per share.
Common stock (30,000 shares) $60,000
Retained earnings 130,000
$190,000
The firm intends to first declare a 5 percent stock dividend and then pay a $0.20 cash dividend (which also causes a reduction of retained earnings).
1- Show the capital section of the balance sheet after the first transaction and then after the second transaction.
Western Pipe Company
After 1sttransaction
Common stock (31,500 shares) $63000Incorrect answer
Retained earnings 119500Correct answer
119500 Correct
182500 Incorrect
Western Pipe Company
After 2ndtransaction
Common stock (31,500 shares) $63000Incorrect
Retained earnings 113200Correct
176200 Incorrect
why is the common stock is incorrect could you help me to solve it correctly ?
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