number 8 Solving for Stockholders Equity Amounts Assume tha

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number 8

Solving for Stockholders\' Equity Amounts Assume that the following amounts are known for Colten Company for the current year: Retained Earnings, beginning balance Retained Earnings, ending balance Net income Fair value of large stock dividend declared $183,000 220,000 101,000 22,000 66,000 73,000 Dividend Payable, beginning balance Dividend Payable, ending balance Required 1. Assume that the only other amount that affected Retained Earnings during the year was a cash dividend that was declared. Compute the amount of the cash dividend declared during the current year 64,000X 2. Compute the amount of cash dividends actually paid in cash to stockholders during the year 57,000X Feedback Check My Work 1) Retained Earnings is increased by Net income and reduced by cash and stock dividends. 2) Dividends payable is increased by declared cash dividends and reduced by the payment of cash dividends.

Solution

1 Retained earning Beginning Balance $183,000 Add: Net Income $101,000 Total $284,000 Less: Retained earning Ending Balance $220,000 Change in retained earning due to dividend declaration $64,000 Less: Stock Dividend Declared $22,000 Cash Dividend Declared $42,000 2 Dividend Payable beginning balance $66,000 Add: Dividend Declared $64,000 Total $130,000 Less: Dividend Payable ending balance $73,000 Total Dividend Paid in Cash $57,000 Less: Stock Dividend paid in cash $22,000 Cash Dividend Paid in cash $35,000 Assumption: Stock dividend is fully paid in cash & remaining paid to cah dividend OR If cash dividend is paid in Full i.e $42,000 than the remaining $15,000 is stock dividend paid in cash 8 Common Stock $90,000 Add: Additional paid in capital - common $720,000 Add: Retained Earnings $48,000 Total (a) $858,000 Total number of common stocks (b) $9,000 Book Value per share (a/b) $95.33 Note: Best efforts have been made to answer the question correctly. In case of any descrepencies kindly comment, I will try to resolve the same Please provide positive feedback