Question
The Western Pipe Company has the following capital section in its balance sheet. Its stock is currently selling for $4 per share. Common stock (60,000
The Western Pipe Company has the following capital section in its balance sheet. Its stock is currently selling for $4 per share.
| Common stock (60,000 shares) | $120,000 |
| Retained earnings | 220,000 |
| $340,000 | |
The firm intends to first declare a 10 percent stock dividend and then pay a $0.25 cash dividend (which also causes a reduction of retained earnings).
Show the capital section of the balance sheet after the first transaction and then after the second transaction.
| Western Pipe Company | |
| After 1st transaction | |
| Common stock (66,000 shares) | $ |
| Retained earnings | |
| $ | |
| Western Pipe Company | |
| After 2nd transaction | |
| Common stock (66,000 shares) | $ |
| Retained earnings | |
| $ | |
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Advanced Accounting
Authors: Paul M. Fischer, William J. Tayler, Rita H. Cheng
11th edition
538480289, 978-0538480284
