DIVIDENDS. Following is the shareholders' equity section of All-Wood Doors on a day its common stock is trading at $130 per share.
Common stock ($2 par value, 40,000 shares issued and outstanding) $ 80,000 Additional paid-in capital on common stock 1,600,000
Retained earnings 3,000,000
a. Use the financial statement template below to show the financial statement effects of the following dividend events. (Assume that the events are independent.)
(1) Cash dividend declaration and payment of $1 per share
(2) Property dividend declaration and payment of shares representing a short-term investment in Screen Products, Ltd., with a fair value of $10,000
(3) 10 percent stock dividend
(4) 100 percent stock dividend
(5) 3-for-1 stock split
(6) 1-for-2 reverse stock split
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Assets
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Liabilities
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Shareholders' Equity
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AOCI
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Journal entry:
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b. Which events changed the book value of common equity? Under what conditions will these events lead to future increases and decreases in ROE?