Squash Delight Inc. has the following balance sheet:

Assets
Cash	$	95,000
Accounts receivable		445,000
Fixed assets		900,000
Total assets	$	1,440,000
Liabilities
Accounts payable	$	340,000
Notes payable		54,000
Common stock (100,000 shares @ $2 par)		200,000
Capital in excess of par		100,000
Retained earnings		746,000
Total liabilities & owners' equity	$	1,440,000

The firm’s stock sells for $12 a share.

a. Show the effect on the capital accounts of a two-for-one stock split. (Do not round intermediate calculations and round your answers to the nearest whole dollar.)

b. Show the effect on the capital accounts of a 10 percent stock dividend. Part b is separate from part a. In part b do not assume the stock split has taken place. (Do not round intermediate calculations and round your answers to the nearest whole dollar.)

c. Based on the balance in retained earnings, which of the two dividend plans is more restrictive on future cash dividends?

	a.Stock dividend
	b.Stock split

 

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Squash Delight Inc. has the following balance sheet Cash Accounts receivable Fixed assets Total assets Assets Liabilities Accounts payable Notes payable Common stock (100,000 shares @ $2 par) Capital in excess of par Retained earings Total liabilities & owners' equity Common stock Capital excess of par Retained earnings Total equity 95,000 445.000 900,000 $ 1.440.000 Effect of Stock Split $ 340.000 54,000 200,000 100,000 746.000 $ 1,440,000 The firm's stock sells for $12 a share. a. Show the effect on the capital accounts of a two-for-one stock split. (Do not round intermediate calculations and round your answers to the nearest whole dollar.) S Squash Delight Inc. has the following balance sheet Cash Accounts receivable Fixed assets Total assets Assets Liabilities Accounts payable Notes payable Common stock (100,000 shares @ $2 par) Capital in excess of par Retained earings Total liabilities & owners' equity Common stock Capital excess of par Retained earnings Total equity 95,000 445.000 900,000 $ 1.440.000 Effect of Stock Split $ 340.000 54,000 200,000 100,000 746.000 $ 1,440,000 The firm's stock sells for $12 a share. a. Show the effect on the capital accounts of a two-for-one stock split. (Do not round intermediate calculations and round your answers to the nearest whole dollar.) S

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a 2 for 1 stock split only the common stock is affected and it ... View the full answer