The stockholders’ equity section of Minh, Inc.’s balance sheet as of December 31, 2013, follows.
Common stock, $3 par value, 1,000,000 shares authorized, 80,000 shares issued
and outstanding ............... $240,000
Additional paid-in capital ............. 75,000
Total contributed capital ............ $315,000
Retained earnings ................ 240,000
Total stockholders’ equity ............ $555,000
A review of Minh’s stockholders’ equity records disclosed the following transactions during 2014:
Mar. 25 The board of directors declared a 5 percent stock dividend to stockholders of record on April 20 to be distributed on May 1. The market value of the common stock was $21 per share.
Apr. 20 Date of record for stock dividend.
May 1 Issued stock dividend.
Sept. 10 Declared a 3-for-1 stock split.
Dec. 15 Declared a 10 percent stock dividend to stockholders of record on January 15 to be distributed on February 15. The market price on this date is $9 per share.
1. Record the stockholders’ equity components of these transactions using T accounts.
2. Prepare the stockholders’ equity section of Minh’s balance sheet as of December 31, 2014. Assume net income for 2014 is $494,000.
3. If you owned 2,000 shares of Minh stock on March 1, 2014, how many shares would you own on February 15, 2015? Would your proportionate share of the ownership of the company be different on the latter date from what it was on the former date? Explain your answer.