Following is the shareholders' equity section of Morgan Supplies on a day its common stock is trading at $77 per share.
Required:
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 $15,000
(3)10 percent stock dividend
(4)100 percent stock dividend
(5)3-for-1 stock split
(6)1-for-2 reverse stock split
Journal entry (optional):
b.Which events changed the book value of common equity?
c.Under what conditions will these events lead to future increases and decreases in ROE?

Question

Following is the shareholders' equity section of Morgan Supplies on a day its common stock is trading at $77 per share.
  Required:
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 $15,000
(3)10 percent stock dividend
(4)100 percent stock dividend
(5)3-for-1 stock split
(6)1-for-2 reverse stock split
  Journal entry (optional):
b.Which events changed the book value of common equity?
c.Under what conditions will these events lead to future increases and decreases in ROE?

Quizplus · Accepted Answer

The Answer of Following is the shareholders' equity section of Morgan Supplies on a day its common stock is trading at $77 per share.
  Required:
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 $15,000
(3)10 percent stock dividend
(4)100 percent stock dividend
(5)3-for-1 stock split
(6)1-for-2 reverse stock split
  Journal entry (optional):
b.Which events changed the book value of common equity?
c.Under what conditions will these events lead to future increases and decreases in ROE?

Following Is the Shareholders' Equity Section of Morgan Supplies on a Day