Problem: Matrix Enterprises is considering offering both a stock dividend and a cash dividend in the upcoming year. The most recent balance sheet for Matrix (before any stock or cash dividend) is presented below (all amounts are in million $).
Cash $114.5
Other Assets 2,835.5
Total Assets 3,250.0
Liabilities $1,750.0
Common shares (75 million authorized; 45
million issued and outstanding) 75.0
Retained Earnings 1,125.0
Total Liabilities and Equity $2,950.0
If Matrix were to declare a 5% stock dividend (assuming a market price of $42.00 at that time - after adjusting to the news of the stock dividend) plus a cash dividend of $0.95 per shares (payable to both current shares and new shares issued through the stock dividend), which of the following correctly represents the common share capital account and retained earnings account balances after the declaration of both of these dividend?
Answers are shown Share Capital first and Retained Earnings balance second.
a. $169,500,000; $983,250,000
b. $169,500,000; $985,612,500
c. $169,500,000; $1,030,500,000
d. $169,500,000; $1,080,112,500
e. $ 78,750,075; $1,076,362,425