HiTech Manufacturing Company has 1,000,000 shares of $1 par value capital stock outstanding on January 1. The

Question:

HiTech Manufacturing Company has 1,000,000 shares of $1 par value capital stock outstanding on January 1. The following equity transactions occurred during the current year:

Apr. 30 Distributed additional shares of capital stock in a 2-for-1 stock split. Market price of stock was $35 per share.

June 1 Declared a cash dividend of $0.60 per share.

July 1 Paid the $0.60 cash dividend to stockholders.

Aug. 1 Declared a 5 percent stock dividend. Market price of stock was $19 per share.

Sept. 10 Issued shares resulting from the 5 percent stock dividend declared on August 1.

a. Prepare journal entries to record the above transactions.

b. Compute the number of shares of capital stock outstanding at year-end.

c. What is the par value per share of HiTech Manufacturing stock at the end of the year?

d. Determine the effect of each of the following on total stockholders’ equity: stock split, declaration and payment of a cash dividend, declaration and distribution of a stock dividend. (Your answers should be either increase, decrease, or no effect. )

Distribution
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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... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...