Following is the shareholders equity section of All-Wood Doors on a day its common stock is trading

Question:

Following is the shareholders’ equity section of All-Wood Doors on a day its common stock is trading at $130 per share.

Common stock ($2 par value, 40,000 shares issued and outstanding) ...$ 80,000

Additional paid-in capital on common stock ..............1,600,000

Retained earnings ............................3,000,000

a. Use the financial statement template below to show the financial statement effects of the following dividend events. (Assume that the events are independent.)

(1) Cash dividend declaration and payment of $1 per share

(2) Property dividend declaration and payment of shares representing a short-term investment in Screen Products, Ltd., with a fair value of $10,000

(3) 10 percent stock dividend

(4) 100 percent stock dividend

(5) 3-for-1 stock split

(6) 1-for-2 reverse stock split

Following is the shareholders' equity section of All-Wood Doors

b. Which events changed the book value of common equity? Under what conditions will these events lead to future increases and decreases in ROE?

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... 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...