The Stockholders' Equity category of Worthy Company's balance sheet as of January 1, 2012, appeared as follows:
Question:
The Stockholders' Equity category of Worthy Company's balance sheet as of January 1, 2012, appeared as follows:
Common stock, $10 par, 40,000 shares issued and outstanding...........$400,000
Additional paid-in capital.........................................................100,000
Retained earnings..................................................................400,000
Total stockholders' equity......................................................$900,000
The following transactions occurred during 2012:
a. Declared a 10% stock dividend to common stockholders on January 15. At the time of the dividend, the common stock was selling for $30 per share. The stock dividend was to be issued to stockholders on January 30, 2012.
b. Distributed the stock dividend to the stockholders on January 30, 2012.
Required
1. Identify and analyze the effect of the transactions.
2. Develop the Stockholders' Equity category of Worthy Company's balance sheet as of January 31, 2012, after the stock dividend was issued. What effect did those transactions have on total stockholders' equity?
Common StockCommon stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
Step by Step Answer:
1 a The effect of the declaration of the stock dividend on January 15 can be identified and analyzed ...View the full answer
Using Financial Accounting Information The Alternative to Debits and Credits
ISBN: 978-1111534912
8th edition
Authors: Gary A. Porter, Curtis L. Norton
