Gibbs Corp. has 1,000,000 authorized shares of $1 par value common stock, of which 475,000 are currently

Question:

Gibbs Corp. has 1,000,000 authorized shares of $1 common stock, of which 475,000 are currently issued and 425,000 are outstanding. The following events are related to Gibbs Corp.’s common stock.
• On November 1, 2007, Gibbs Corp. declared a 10 percent stock to all shareholders of record on November 30, distributable on December 30. At the time of the declaration, the stock was trading at $50 per share.
• On October 8, 2008, Gibbs Corp. declared a 4:1 stock split. At the time of the split, the stock was trading at $90 per share.
• On November 5, 2009, Gibbs Corp. declared a $1 per share cash to all shareholders of record on November 30, payable on December 30. At the time of the declaration, the stock was trading at $25 per share.
Required:
(a) Calculate the following amounts after each event took place:
(1) Number of shares authorized
(2) Number of shares issued
(3) Number of shares outstanding.
(4) Number of shares in treasury
(5) per share
(6) Balance in the account
(b) Prepare the journal entries associated with each event.
(c) Why might Gibbs Corp. have declared a stock in 2007 rather than a cash Why might Gibbs Corp. have split its stock in 2008?
Common Stock
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A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...