the stockholders’ equity section of Acerin Moving and Storage Co

the stockholders’ equity section of Acerin Moving and Storage Corporation’s balances sheet as of December 31, 2010, appears below.


Contributed capital

Common stock, $2 par value, 6,000,000 shares

authorized, 1,000,000 shares issued

and outstanding ........... $ 2,000,000

Additional paid-in-capital ........ 800,000

Total contributed capital ........ $ 2,800,000

Retained earnings ............ 2,160,000

Total stockholders’ equity ........ $ 4,960,000


The company engaged in the following stockholders’ equity transactions during 2011:


Mar 5Declared a $0.40 per share cash dividend to be paid on April 6 to stockholders of record on march 20.

20Date of record

Apr 6Paid the cash dividend

June 17 Declared a 10 percent stock dividend to be distributed

August 17 to stockholders of record on August 5. The market value of the stock was $14 per share

Aug 5Date of record for the stock dividends.

17Distributed the stock dividend.

Oct 2 Split its stock 2 for 1.

Dec 27Declared a cash dividend of $0.20 payable January 27, 2012, to stockholders of record on January 14, 2012.


Required

1. Record the 2011 transaction in journal form.

2. Prepare the stockholders’ equity section of the company’s balance sheet as of December 31, 2011. Assume net income for the year is $800,000.

3. If you owned some shares of Acerin, would you expect the total value of your shares to go up or down as a result of the stock dividends and stock split? What intangible might affect the stock value?

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...

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