Mills Company lists the following condensed balance sheet as of the beginning of 2007: Mills is considering

Question:

Mills Company lists the following condensed as of the beginning of 2007:

Mills Company lists the following condensed balance sheet as of

Mills is considering the impact of various types of dividends on this balance sheet. Each dividend would be declared and paid in 2007. These include:
1. Cash dividend of $1.00 per share on the 10,000 shares outstanding.
2. Stock dividend of 5% on the 10,000 shares outstanding when the market price is $17 per share.
3. Property dividend consisting of the $9,000 (book value) investment in M bonds being held to maturity. This investment has a current market value of $13,000. (For Requirement 2, assume any gain or loss is to be reflected in retained earnings. Disregard income taxes.)
4. Scrip dividend of $0.80 per share on the 10,000 shares outstanding. The scrip earns interest at a 12% annual rate and is to be declared on January 30 and paid on December 30, 2007. (For Requirement 2, assume any interest expense is to be reflected in retained earnings. Disregard income taxes.)
5. Cash dividend consisting of a $0.70 per share normal dividend and a $0.30 per share liquidating dividend.

Required
For each preceding independent dividend:
1. Prepare the appropriate journal entries for the declaration and payment of the dividend.
2. Prepare a condensed balance sheet after the dividend has beenpaid.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... 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...