The condensed balance sheet of Laporte Corporation reports the following: The market price of the common shares

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The condensed balance sheet of Laporte Corporation reports the following:
The condensed balance sheet of Laporte Corporation reports the following:
The

The market price of the common shares is currently $30 per share. Laporte wants to assess the impact of three possible alternatives on the corporation and its shareholders. The alternatives are:
1. Payment of a $1.50 per share cash dividend
2.
Distribution of a 5% stock dividend
3.
A 3-for-1 stock split
Instructions
(a) For each alternative, determine the impact on (1) assets, (2) liabilities, (3) common shares, (4) retained earnings, (5) total shareholders' equity, and (6) the number of shares.
(b) Assume a Laporte shareholder currently owns 1,000 common shares at a cost of $28,000. What is the impact of each alternative for the shareholder, assuming that the shares' market price changes proportionately with the alternative?
TAKING IT FURTHER
What are the advantages and disadvantages to the company of a stock split?

Distribution
The word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most...
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...
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Accounting Principles

ISBN: 978-1119048473

7th Canadian Edition Volume 2

Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Warren, Lori Novak

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