Problem:
Guo limited provides you with the following condensed balance sheet information.
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Assets
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Liabilities and shareholders equity
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Current assets $40,000
Investments in ABC company- trading 60,000
(10,000 shares)
Equipment (net) 250,000
Intangibles 60,000
total assets $410,000
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Current and long term liabilities $100,000
Shareholders equity
Common shares* $20,000
Contributed surplus 110,000
Retained earnings 180,000 310,000
Total liabilities and
shareholders equity $410,000
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* 10,000 shares issued and outstanding
Instructions:
For each transaction below, indicate the dollar impact (if any) on the following five items: (1) total assets, (2) common shares, (3) contributed surplus, (4) retained earnings, and (5) shareholders’ equity. (each situation is independent.)
(A) The company declares and pays a $0.50 per share dividend.
(B) The company declares and issues a 10% stock dividend when the share’s market price is $12 per share.
(C) The company declares and issues a 40% stock dividend when the share’s market price is $17 per share.
(D) The company declares and distributes a property dividend. The company gives one share of ABC shares for every two shares of company shares held. ABC is selling for $12 per share on the date the property dividend is declared.
(E) The company declares a 3-for-1 stock split and issues new shares.