2023 16 Stock dividends and stock splits have the following effects on retained | Assignments Online
2023 16 Stock dividends and stock splits have the following effects on retained | Assignments Online
Assignments Online 2023 Business Finance
16. Stock dividends and stock splits have the following effects on retained earnings:
Stock Splits Stock Dividends
a. Increase No change
b. Decrease Decrease
c. No change No change
d. No change Decrease
17. Somento Forest Inc. has 10,000 shares of 6%, $100 par value, cumulative preferred stock and 100,000 shares of $1 par value common stock outstanding at December 31, 2014. What is the annual dividend on the preferred stock?
a. $60 per share
b. $60,000 in total
c. $100,000 in total
d. $0.60 per share
18. A prior period adjustment that corrects income of a prior period requires that an entry be made to
a. an income statement account.
b. the retained earnings account.
c. a current year revenue or expense account.
d. an asset account.
19. The following selected amounts are available for Vizio Company.
Retained earnings (beginning) $1,600
Net loss 300
Cash dividends declared 200
Stock dividends declared 200
What is its ending retained earnings balance?
a. $1,300
b. $900
c. $1,400
d. $1,200
20. Bento, Inc. had 500,000 shares of common stock outstanding before a stock split occurred, and 1,500,000 shares outstanding after the stock split. The stock split was
a. 2-for-5.
b. 5-for-1.
c. 3-for-1
d. 1-for-5.
PROBLEM 1
On January 1, 2010, Anderson Corporation had 60,000 shares of $1 par value common stock issued and outstanding. During the year, the following transactions occurred:
Mar. 1 Issued 30,000 shares of common stock for $400,000.
June 1 Declared a cash dividend of $1.50 per share to stockholders of record on June 15.
June 30 Paid the $1.50 cash dividend.
Dec. 1 Purchased 10,000 shares of common stock for the treasury for $20 per share.
Dec. 15 Declared a cash dividend on outstanding shares of $2 per share to stockholders of record on December 31.
Instructions
Prepare journal entries to record the above transactions. Use the template below.
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PROBLEM 2
The following information is available for Grey Goose Inc.:
Beginning retained earnings $600,000
Cash dividends declared 40,000
Net income for 2014 100,000
Stock dividend declared 10,000
Understatement of last year’s depreciation expense 20,000
Instructions
Based on the preceding information, prepare a retained earnings statement for 2014 in the box below.
GREY GOOSE INC.
Retained Earnings Statement
For the Year Ended December 31, 2014
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PROBLEM 3
Timber Ridge Corporation was organized on January 1, 2013. During its first year, the corporation issued 40,000 shares of $5 par value preferred stock and 400,000 shares of $1 par value common stock. At December 31, the company declared the following cash dividends:
2013 $ 7,000
2014 $30,000
2015 $70,000
Instructions
(a) Show the allocation of dividends to each class of stock, assuming the preferred stock dividend is 5% and not cumulative.
(b) Show the allocation of dividends to each class of stock, assuming the preferred stock dividend is 6% and cumulative.
c) Journalize the declaration of the cash dividend at December 31, 2015
(a) Preferred Common Total
2013
2014
2015
(b) Preferred Common Total
2013
2014
2015
(c)
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