The company with the common equity accounts shown here has declared a 5-for-1 stock split when...
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The company with the common equity accounts shown here has declared a 5-for-1 stock split when the market value of its stock is $32 per share. The firm's 80 cent per share cash dividend on the new (post-split) shares represents an increase of 25 percent over last year's dividend on the pre-split stock.
Common stock ($1 par value)=$410,000
Capital surplus=851,000
Retained earnings=3,770,800
Total owner's equity=$5,031,800
What is the new par value per share? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
What was last year's dividend per share? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Cash dividends and dividend payment
The term dividend usually refers to a cash distribution of earnings. Another type of dividend is paid out in shares of stock. This dividend is referred to as a stock dividend. When a firm declares a stock split, it increases the number of shares outstanding whereas decrease the par value.
Answer and Explanation: 1
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View this answerWhen stock split occurs, number of outstanding shares increases whereas par value decrease. The number of outstanding shares will change by the ratio...
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Cash Dividends & Dividend Payment
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Chapter 16 / Lesson 1
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Dividends are incentives in the form of payments to shareholders of a company. Explore the different types of dividends and the standard method of payments that they occur in.
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