Hayley's Optical has a stockholders' equity account as shown below.The firm's common stock currently sells for $20 per share. (a)What is the maximum dividend per share Hayley's Optical can pay? (Assume capital includes all paid-in capital.)
(b)Recast the partial balance sheet (the stockholders' equity accounts)to show independently
(1)a 2-for-1 stock split of the common stock.
(2)a cash dividend of $1.50 per share.
(3)a stock dividend of 5% on the common stock.
(c)At what price would you expect Hayley's Optical stock to sell after
(1)the stock split?
(2)the stock dividend?

Question

Hayley's Optical has a stockholders' equity account as shown below.The firm's common stock currently sells for $20 per share.  (a)What is the maximum dividend per share Hayley's Optical can pay? (Assume capital includes all paid-in capital.)
(b)Recast the partial balance sheet (the stockholders' equity accounts)to show independently
(1)a 2-for-1 stock split of the common stock.
(2)a cash dividend of $1.50 per share.
(3)a stock dividend of 5% on the common stock.
(c)At what price would you expect Hayley's Optical stock to sell after
(1)the stock split?
(2)the stock dividend?

Quizplus · Accepted Answer

The Answer of Hayley's Optical has a stockholders' equity account as shown below.The firm's common stock currently sells for $20 per share.  (a)What is the maximum dividend per share Hayley's Optical can pay? (Assume capital includes all paid-in capital.)
(b)Recast the partial balance sheet (the stockholders' equity accounts)to show independently
(1)a 2-for-1 stock split of the common stock.
(2)a cash dividend of $1.50 per share.
(3)a stock dividend of 5% on the common stock.
(c)At what price would you expect Hayley's Optical stock to sell after
(1)the stock split?
(2)the stock dividend?

Hayley's Optical Has a Stockholders' Equity Account as Shown Below