Some people like to play a game that constructs a sequence of chemical elements where each element in the sequence begins with the last letter of its predecessor. For example,….
Prepare the stockholders’ equity section of the company’s balance sheet as of December 31, 20×7.
Dividends and Stock Split Transactions and Stockholder’s Equity
The stockholders’ equity section of Rigby Moving and Storage Company’s balance sheet as of December 31, 20×6, appears at the top of the next page. The company engaged in the following stockholders’ equity transactions during 20×7:
Mar. 5 Declared a $.40 per share cash dividend to be paid on April 6 to stockholders of record on March 20.
20 Date of record.
Apr. 6 Paid 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. 5 Date of record.
17 Distributed the stock dividend.
Oct. 2 Split its stock 2 for 1.
Dec. 27 Declared a cash dividend of $.20 payable January 27, 20×8, to stockholders of record on January 14, 20×8.
1. Record the 20×7 transactions in journal form.
2. Prepare the stockholders’ equity section of the company’s balance sheet as of December 31, 20×7. Assume net income for the year is $400,000.
3. User Insight: If you owned some shares of Rigby, 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 intangibles might affect the stock value?