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, 20×8.
Dividends, Stock Splits, and Stockholders’ Equity
The stockholders’ equity section of the balance sheet of Pittman Corporation as of December 31, 20×7, was as follows:
Pittman Corporation had the following transactions in 20×8:
Feb. 28 The board of directors declared a 10 percent stock dividend to stockholders of record on March 25 to be distributed on April 5. The market value on this date is $16.
Mar. 25 Date of record for stock dividend.
Apr. 5 Issued stock dividend.
Aug. 3 Declared a 2-for-1 stock split.
Nov. 20 Purchased 18,000 shares of the company’s common stock at $8 per share for the treasury.
Dec. 31 Declared a 5 percent stock dividend to stockholders of record on
January 25 to be distributed on February 5. The market value per share was $9.
1. Record the stockholders’ equity components of the transactions for Pittman Corporation in T accounts.
2. Prepare the stockholders’ equity section of the company’s balance sheet as of December 31, 20×8. Assume net income for 20×8 is $108,000.
3. User Insight: If you owned 1,000 shares of Pittman stock on February 1, 20×8, how many shares would you own February 5, 20×9? Would your proportionate share of the ownership of the company be different on the latter date than it was on the former date? Explain your answer.