Problem 15-8 Carla Company provides you with the following condensed balance she
ID: 2526364 • Letter: P
Question
Problem 15-8 Carla Company provides you with the following condensed balance sheet information Assets Current assets Equity investments Equipment (net) Intangibles $37,700 65,400 240,600 60,600 $404,300 Total assets Liabilities and Stockholders Equity Current and long-term liabilities Stockholders' equity $97,200 Common stock ($5 par) Paid-in capital in excess of par Retained earnings $18,000 106,900 182,200 307,100 Total liabilities and stockholders' equity $404,300 For each transaction below, indicate the dollar impactf 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.)Explanation / Answer
(a) Declares and pay .55 per share cash dividend No of shares Common Stock/Par value 3600 Amount of Dividend paid .55*3600 1980 1 Total Assets Reduced by 1980 2 Common Stock NA NA 3 Paid in Capital in excess of par NA NA 4 Retained Earnings Reduced by 1980 5 Stock holders equity Reduced by 1980 (b) Declares and issue 10% stock dividend when the market price of the stock is $14 per share Total Dividend (10% of common stock)- no of shares 360 Market Price 14 Amount to be transferred from Retained Earnings to common stock @10 per share 3600 Amount to be transferred from Retained Earnings to Paid in Capital in excess of par @4 per share 1440 1 Total Assets NA NA 2 Common Stock Increased by 3600 3 Paid in Capital in excess of par Increased by 1440 4 Retained Earnings Reduced by 5040 5 Stock holders equity Increased by 5040 (c) Declares and issue 27% stock dividend when the market price of the stock is $16 per share Total Dividend (27% of common stock)- no of shares 972 Market Price 16 Amount to be transferred from Retained Earnings to common stock @10 per share 9720 * Since this is a large stock dividend amount to be transferred from Retained earnings to Common Stock is at par value 1 Total Assets NA NA 2 Common Stock Increased by 9720 3 Paid in Capital in excess of par Increased by 0 4 Retained Earnings Reduced by 9720 5 Stock holders equity Increased by 9720 (d) Declares and distributes a property dividend No of shares of ABC ltd to be issues 1800 (1 for every 2 of Carla Ltd) MV of ABC Ltd shares@10 18000 Cost of ABC Ltd shares @6 10800 ( value of investment 65400/no os shares i.e.10900) Gain 7200 1 Total Assets Reduced by 10800 2 Common Stock NA NA 3 Paid in Capital in excess of par NA NA 4 Retained Earnings Reduced by 10800 5 Stock holders equity Reduced by 10800