The Shareholder’s Equity section the balance sheet of Chequessett Corporation is presented in the following table.

Shareholders' Equity
Preferred Stock, $25 par, 4.8%, cumulative, nonparticipating, 10,000 shares issued and outstanding	$250,000
Common Stock, $1 Par, 500,000 shares issued and outstanding	500,000
Paid-in Capital in Excess of Par - Preferred	25,000
Paid-in Capital in Excess of Par - Common	2,785,000
Retained Earnings	12,700,000
Total Shareholders' Equity	$16,260,000

Instructions

Answer the following questions. Show supporting calculations.

1. Chequessett’s Board of Directors declared $750,000 in total dividends to be paid. Assuming that no dividends were declared or paid in the prior two years, calculate the amounts that will be paid to common and to preferred.
2. Chequessett’s Board of Directors declared a 12% stock dividend on the common stock when the stock was trading at $12 per share. Calculate the net effect on retained earnings as a result of the dividend declaration.
3. Chequessett’s Board of Directors declared a 4-for-1 traditional stock split on the common stock when the stock was trading at $10.50 per share. What is the par value per share after the stock split?

Answer rating: 100% (QA)

Annual preferred dividend 25000048 12000 a Divi... View the full answer