The shareholders equity section of Golden Corporations comparative balance sheet at the end of 2010 and 2009

Question:

The shareholders€™ equity section of Golden Corporation€™s comparative at the end of 2010 and 2009 was presented as follows at a recent shareholders' meeting:

The shareholders€™ equity section of Golden Corporation€™s comparative balance sheet

The following items were also disclosed at the shareholders' meeting: net income for 2010 was $666,000; a 16% stock dividend was issued on December 14, 2010, when the market value was $ 18 per share; the market value per share on December 31, 2010, was $ 16; management has put aside $900,000 and plans to borrow $200,000 to help finance a new plant addition, which is expected to cost a total of $1,000,000; and the customary $1.74 per share cash dividend was revised to $1.50 for the cash dividend declared and issued in the last week of December 2010.
As part of their shareholders€™ goodwill program, management asked shareholders to write down any questions they might have concerning the company€™s operations or finances. As assistant controller, you are given the shareholders€™ questions.
Required:
Prepare brief but reasonably complete answers to the following questions:
a. What did Golden do with the cash proceeds from the stock dividend issued in December?
b. What was the book value per share at the end of 2009 and 2010?
c. 1 owned 5,000 shares of Golden in 2009 and have not sold any shares. How much more or less of the corporation do I own on December 31, 2010, and what happened to the market value of my interest in the company?
d. I heard someone say that stock dividends don€™t give me anything I didn€™t already have. Why did you issue one? Are you trying to fool us?
e. Instead of a stock dividend, why didn€™t you declare a cash dividend and let us buy the new shares that were issued?€ƒ
f. Why are you cutting back on the dividends I receive?
g. If you have $900,000 put aside for the new plant addition that will cost $1,000,000, why are you borrowing $200,000 instead of just the missing $100,000?

Goodwill
Goodwill is an important concept and terminology in accounting which means good reputation. The word goodwill is used at various places in accounting but it is recognized only at the time of a business combination. There are generally two types of... 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... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... 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...