ABC Company Balance Sheet December 31, 20xx <?xml:namespace prefix = o ns = \"ur
ID: 2356290 • Letter: A
Question
ABC Company
Balance Sheet
December 31, 20xx <?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /?>
Assets
Liabilities and Equity
Cash
$10,000,000
Accounts Payable
$20,000,000
Accounts Receivable
250,000,000
Long-term debt
400,000,000
Inventory
120,000,000
Common Stock ($10 par, 1,000,000 outstanding)
10,000,000
Plant and Equipment
325,000,000
Paid-in capital
90,000,000
Retained Earnings
185,000,000
Total
$705,000,000
Total
$705,000,000
The current price of a stock is $58 per share.
Required:
Assets
Liabilities and Equity
Cash
$10,000,000
Accounts Payable
$20,000,000
Accounts Receivable
250,000,000
Long-term debt
400,000,000
Inventory
120,000,000
Common Stock ($10 par, 1,000,000 outstanding)
10,000,000
Plant and Equipment
325,000,000
Paid-in capital
90,000,000
Retained Earnings
185,000,000
Total
$705,000,000
Total
$705,000,000
Explanation / Answer
Construct a balance sheet after a two for one stock split. What will be the new price of the stock? (Problem 1 tab) There would now be 2,000,000 shares outstanding. The par value would be calculated as: $5 par value / 2 = $2.50 par value. The current price would probably also drop by half to $29. Construct a balance sheet after a 5% stock dividend. What is the new price of the stock? (Problem 2 tab) Shares outstandind would be 1,000,000 x 1.05 = 1,050,000. The price would not change. Construct a balance sheet after a one for two reverse stock split. What is the new price of the stock? (Problem 3 tab) There would now be 500,000 shares outstanding and the par value would be $10 per share. The market price would probably increase to $116 per share Construct a balance sheet after a $3 per share cash dividend. What is the total cash dividend? (Problem 4 tab) 1,000,000 x 3 = $3,000,000