13 HW Parti On June 30 2017 Sharper Corporations common stoc

13 HW Parti On June 30, 2017, Sharper Corporation\'s common stock Is priced at $62 per share before any stock dividend or split, and the stockholders\' equity section of its balance sheet appears as follows. Common stock-$10 par value, 120, 000 shares authorized, 50,000 shares issued and outstanding Paid-in capital in excess of par value, common stock Retained earnings 500, 000 200,000 660,000 $1,360,000 Total stockholders\' equity 1. Assume that the company declares and im mediately distributes a 50% stock dividend. This event is recorded by capitalizing retained earnings equal to the stock\'s par value. Answer these questions about stockholders\' equity as it exists after issuing the new shares. a.,b.& c. Complete the below table to calculate the retained earnings balance, total stockholders\' equity and number of outstanding shares. 2. Assume that the company implements a 3-for-2 stock split instead of the stock dividend in part 1. Answer these questions about a.bé e. Complete the below tableto calculate the retained earnings balance,total stockholders\' equityand number of outstanding stockholders\' equity as it exists after issuing the new shares. shares. nces Complete this question by entering your answers in the tabs below. Required 1 Required 2 Assume that the company declares and immediately distributes a 50% stock dividend. This event is recorded by captaizing retained earnings equal to the stock\'s par value. Answer these questions about stockholders equity as it exists after issuing the new shares. Complete the below table to calculate the retained earnings balance, total stockholders\' equity and number of outstanding shares. show less Dividend Before Stock Dividend After Stock

Solution

Solution: 1. Stock Dividend Before Stock Dividend Impact of Stock Dividend After Stock Dividend Common stock                                       500,000                     250,000                   750,000 Paid in capital in excess of par value                                       200,000                   200,000 Total contributed capital                                       700,000                     250,000                   950,000 Retained Earnings                                       660,000 (250,000)                   410,000 Total Stockholders\' Equity                                   1,360,000                                 -                 1,360,000 Number of common shares outstanding 50,000 25,000 75,000 Working Notes: I II III = I + II Stock Dividend Before Stock Dividend Impact of Stock Dividend After Stock Dividend Common stock                                       500,000                     250,000                   750,000 Paid in capital in excess of par value                                       200,000                   200,000 Total contributed capital                                       700,000                     250,000                   950,000 a. Retained Earnings                                       660,000 (250,000)                   410,000 b. Total Stockholders\' Equity                                   1,360,000                                 -                 1,360,000 c. Number of common shares outstanding 50,000 25,000 75,000 Now, Since, the company declare stock dividend 50% at stock par value means, Earlier 50,000 shares of $10 where outstanding, Now additional 50% of 50,000 = 25,000 were issued as stock dividend a stock par value. for this stock dividend amount required = 25,000 shares x $10 par value = $250,000 which is charged to retained earnings. Hence, Retained earnings decreases by this amount and the total Stockholder\'s remain same that is $1,360,000 Common stock increases and retained earnings decreases with same amount. a. Retained earnings Before Stock dividend 660,000 Less: $10 par value of 25,000 dividend shares 250,000 After stock dividend 410,000 b. Total stockholders’ equity   Common stock—$10 par value, 120,000 shares authorized, $ 750,000   75,000 shares issued and outstanding   Paid-in capital in excess of par value 200,000   Retained earnings 410,000   Total stockholders’ equity $ 1,360,000 c.   Number of outstanding shares Outstanding shares before the dividend 50,000 Add: Dividend shares 25,000   Outstanding shares after the dividend 75,000 2. Stock Split Before Stock Split Impact of Stock Split After Stock Split Common stock                                       500,000                   500,000 Paid in capital in excess of par value                                       200,000                   200,000 Total contributed capital                                       700,000                   700,000 Retained earnings                                       660,000                   660,000 Total stockholders\' equity                                   1,360,000               1,360,000 Number of common shares outstanding                                         50,000                        25,000                     75,000 Working Notes: stock split of 3 for 2 means for existing 2 shares company will issue 3 shares hence, one share for every two share will be increased. hence, for 50,000 shares , additional share issued will 25,000 and total count will be 75,000 50,000 x 3 / 2 = 75,000 shares It will not change in common stock total value, not paid in capital in excess of par value or retained earnings Stock Split Before Stock Split Impact of Stock Split After Stock Split Common stock                                       500,000                   500,000 a Paid in capital in excess of par value                                       200,000                   200,000 b Total contributed capital                                       700,000                   700,000 c= a+b Retained earnings                                       660,000                   660,000 d Total stockholders\' equity                                   1,360,000               1,360,000 e=c+d Number of common shares outstanding                                         50,000                        25,000                     75,000 I II III = I + II Please feel free to ask if anything about above solution in comment section of the question.