Problem 15-8 Sheridan Company provides you with the following condensed balance
ID: 2394084 • Letter: P
Question
Problem 15-8
Sheridan Company provides you with the following condensed balance sheet information:
Assets
Liabilities and Stockholders’ Equity
Total liabilities and stockholders’ equity: $404,500
For each transaction below, indicate the dollar impact (if any) on the following five items:
(1) total assets,
(2) common stock,
(3) paid-in capital in excess of par,
(4) retained earnings, and
(5) stockholders’ equity.
(Each situation is independent.)
For each A, B, C D and E, answer if there is an increase, decrease or no effect and if it does increase or decrease, write the amount.
(a) Sheridan declares and pays a $0.60 per share cash dividend.
(1) total assets,
(2) common stock,
(3) paid-in capital in excess of par,
(4) retained earnings, and
(5) stockholders’ equity.
(b) Sheridan declares and issues a 10% stock dividend when the market price of the stock is $15 per share.
(c) Sheridan declares and issues a 30% stock dividend when the market price of the stock is $15 per share.
(d) Sheridan declares and distributes a property dividend. Sheridan gives one share of its equity investment (ABC stock) for every two shares of Sheridan Company stock held. Sheridan owns 9,800 shares of ABC. ABC is selling for $9 per share on the date the property dividend is declared.
(e) Sheridan declares a 3-for-1 stock split and issues new shares.
Assets
Current assets $ 37,600 Equity investments 58,800 Equipment (net) 248,300 Intangibles 59,800 Total assets $404,500Liabilities and Stockholders’ Equity
Current and long-term liabilities $107,900 Stockholders’ equity Common stock ($5 par) $ 20,800 Paid-in capital in excess of par 117,100 Retained earnings 158,700 296,600Total liabilities and stockholders’ equity: $404,500
For each transaction below, indicate the dollar impact (if any) on the following five items:
(1) total assets,
(2) common stock,
(3) paid-in capital in excess of par,
(4) retained earnings, and
(5) stockholders’ equity.
(Each situation is independent.)
For each A, B, C D and E, answer if there is an increase, decrease or no effect and if it does increase or decrease, write the amount.
(a) Sheridan declares and pays a $0.60 per share cash dividend.
(1) total assets,
(2) common stock,
(3) paid-in capital in excess of par,
(4) retained earnings, and
(5) stockholders’ equity.
(b) Sheridan declares and issues a 10% stock dividend when the market price of the stock is $15 per share.
(c) Sheridan declares and issues a 30% stock dividend when the market price of the stock is $15 per share.
(d) Sheridan declares and distributes a property dividend. Sheridan gives one share of its equity investment (ABC stock) for every two shares of Sheridan Company stock held. Sheridan owns 9,800 shares of ABC. ABC is selling for $9 per share on the date the property dividend is declared.
(e) Sheridan declares a 3-for-1 stock split and issues new shares.
Explanation / Answer
Total Assets
Common Stock
Paid in Capital in excess of Par
Retained Earnings
Stockholders Equity
(a)
Decrease by
(4160 * 0.60)
=2496
No effect
No effect
Decrease by
(4160 * 0.60)
=2496
Decrease by
(4160 * 0.60)
=2496
(b)
No effect
Increase by
(416 * 5)
=2080
Increase by
(416 * 10)
=4160
Decrease by
(416 * 15)
=6240
No effect
(c)
No effect
Increase by
(1248* 5)
=6240
Increase by
(1248 * 10)
=12480
Decrease by
(1248 * 15)
=18720
No effect
(d)
Decrease by 49920
No effect
No effect
Decrease by
49920
Decrease by
49920
(e)
No effect
No effect
No effect
No effect
No effect
Total Assets
Common Stock
Paid in Capital in excess of Par
Retained Earnings
Stockholders Equity
(a)
Decrease by
(4160 * 0.60)
=2496
No effect
No effect
Decrease by
(4160 * 0.60)
=2496
Decrease by
(4160 * 0.60)
=2496
(b)
No effect
Increase by
(416 * 5)
=2080
Increase by
(416 * 10)
=4160
Decrease by
(416 * 15)
=6240
No effect
(c)
No effect
Increase by
(1248* 5)
=6240
Increase by
(1248 * 10)
=12480
Decrease by
(1248 * 15)
=18720
No effect
(d)
Decrease by 49920
No effect
No effect
Decrease by
49920
Decrease by
49920
(e)
No effect
No effect
No effect
No effect
No effect