The Western Pipe Company has the following capital section in its balance sheet. Its stock is currently

Question:

The Western Pipe Company has the following capital section in its balance sheet. Its stock is currently selling for $5 per share.

Common stock (50,000 shares)...........$100,000
Retained earnings ............................ . .100,000
.............................................................$200,000

The firm intends to first declare a 10 percent stock dividend and then pay a $0.20 cash dividend (which also causes a reduction of retained earnings). Show the capital section of the balance sheet after the first transaction and then after the second transaction.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Dividend
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...

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