1. United Equipment Corp. shows the following capital accounts before a 10 percent stock dividend: Common...

 

Transcribed Image Text:

1. United Equipment Corp. shows the following capital accounts before a 10 percent stock dividend: Common stock (200,000 shares at $5 par) Capital in excess of par Retained eamings Net worth $1.000,000 600,000 2,400,000 $4.000,000 The firm's shares have a market price of $20. Show the revised capital accounts after the 10 percent stock dividend. (2 marks) 2. a. Assume United Equipment Corp. in the prior problem had total earnings of $400,000 before the stock dividend. It also had a P/E ratio of 10. What were the EPS and stock price before the stock dividend? (1 mark) b. After the stock dividend, what will earnings per share and the stock price be? Assume the P/E ratio stays at 10. (1 mark) c. Khalid owns 100 shares before. What is the value of his portfolio (total holdings) before and after the stock dividend? (1 mark) 1. United Equipment Corp. shows the following capital accounts before a 10 percent stock dividend: Common stock (200,000 shares at $5 par) Capital in excess of par Retained eamings Net worth $1.000,000 600,000 2,400,000 $4.000,000 The firm's shares have a market price of $20. Show the revised capital accounts after the 10 percent stock dividend. (2 marks) 2. a. Assume United Equipment Corp. in the prior problem had total earnings of $400,000 before the stock dividend. It also had a P/E ratio of 10. What were the EPS and stock price before the stock dividend? (1 mark) b. After the stock dividend, what will earnings per share and the stock price be? Assume the P/E ratio stays at 10. (1 mark) c. Khalid owns 100 shares before. What is the value of his portfolio (total holdings) before and after the stock dividend? (1 mark)

Answer rating: 100% (QA)

United Equipment Corp Ans 1 No of common stock outstanding before the dividend 200000 New shares to ... View the full answer