Problem: Snow Inc. has the following items in its current balance sheet:
Common Stock 10,000,000 shares authorized with 2,000,000 issued $6,000,000
Capital Surplus $24,000,000
Treasury Stock on Common 100,000 shares $6,000,000
Cumulative Preferred Stock 500,000 authorized [2%] $100 par $8,000,000
Treasury Stock on Preferred Stock 100,000 shares $6,000,000
Retained Earnings $60,000,000
Problem 1: Snow Inc. wishes to announce a total cash dividend of $40,000,000. How is this dividend to be split between the common and preferred stockholders?
Problem 2: What is the dividend per share for common and preferred after the dividend distribution from question 1 above?
Problem 3: Suppose Snow Inc. was three years in the arrears in paying dividends to the preferred stockholders, then what is the dollar amount of the preferred and common shareholder dividend?
Problem 4: How many Snow common stock shares are truly outstanding?
Problem 5: If Snow Inc. announces a 2 for 1 stock split of the cumulative preferred, then what is the new total number of shares outstanding after the preferred stock split?
Problem 6: If Snow Inc. were to provide for a 5% common stock dividend, then how many new shares are to be mailed to existing shareholders?
Problem 7: Assume in question [6] the market price of the common stock was $15 at the time of the stock dividend. Provide journal entry to record the stock dividend?
Problem 8: Using the equity portion of Snow Inc. balance sheet above, determine the amount of the total equity in Snow Inc. Assume this question ignores the results of questions [1-7] above.
Problem 9: What is the impact of the common and preferred cash dividend [$40,000,000 as per question 1 above] on the current balance sheet of Snow Inc.?
Problem 10: What is the impact of the 20% common stock dividend on the balance sheet? Assume this question ignores questions [1-9] above.
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