Question

Carfinco Inc. showed the following equity information at December 31, 2013.
Common shares, unlimited shares authorized;
4,000,000 shares issued and outstanding..................................................... $1,004,480
Retained earnings............................................................................................. 1,312,000

On April 1, 2014, 200,000 common shares were issued at $0.60 per share. On June 1, the board of directors declared a 15% share dividend to shareholders of record on June 15; the distribution date was July 1. The market prices of the shares on June 1, June 15, and July 1 were $2.08, $1.76, and $1.96, respectively. On December 11, the board of directors declared a 2:1 share split to shareholders of record on December 15; the distribution date was December 20. Net income earned during the year was $1,400,000.

Required
Prepare the company’s equity section on the December 31, 2014, balance sheet.
Analysis Component: What are the benefits to Carfinco Inc. of declaring a share dividend as opposed to a cash dividend?



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  • CreatedJanuary 08, 2015
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