A firm has the following items on its balance sheet: Cash ........................$ 20,000,000 Inventory ...................... 134,000,000 Notes

Question:

A firm has the following items on its balance sheet:

Cash ........................$ 20,000,000

Inventory ...................... 134,000,000

Notes payable to bank ................ 31,500,000

Common stock ($10 par; 1,000,000 shares outstanding) ... 10,000,000

Retained earnings ................. 98,500,000

Describe how each of these accounts would appear after:

a) A cash dividend of $1 per share

b) A 10 percent stock dividend (fair market value of stock is $13 per share)

c) A 3-for-1 stock split

d) A 1-for-2 reverse stock split

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...