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    wanye's Avatar
    wanye Posts: 10, Reputation: 1
    New Member
     
    #1

    Mar 20, 2007, 05:45 PM
    stock dividend/ stock split?
    Hi all,

    Let's say if my company began 1 Jan 2006 with 200,000 shares of $1 par value common
    stock outstanding. The stockholders equity is as follows:

    Stockholders equity
    Capital stock:
    Ordinary share, $1 par value,
    1,000,000 shares authorized,
    200,000 shares issued and
    outstanding $200,000
    Additional paid in capital:
    Share premium – Ordinary share 500,000
    Total paid in capital $700,000
    Retained Earnings 150,000
    Total stockholders equity $850,000


    If my company made the following transactions during the year:

    1) 4th April - The company declared and issued a 20% stock dividend. The market value
    of the share is $2.40.

    2) 8th November - The company declared a two-for-one stock split. The stock split is
    completed on the same day.

    JE for the above stock transactions are:

    DR
    0.2 X 200k X 2.4 = 96000
    CR
    96000

    DR
    500k / 2 = 250 k
    CR
    500k / 2 = 250 k

    Is this correct ?

    how do I actually make use of the above info to calculate stock dividend & stock split?

    What if I had a net income of 250k and paid cash dividends of 75k during the year? How shld I calculate the shareholders equity in the b/s as at 31 Dec 06?
    wanye's Avatar
    wanye Posts: 10, Reputation: 1
    New Member
     
    #2

    Mar 22, 2007, 08:04 PM
    Quote Originally Posted by wanye
    Hi all,

    Let's say if my company began 1 Jan 2006 with 200,000 shares of $1 par value common
    stock outstanding. The stockholders equity is as follows:

    Stockholders equity
    Capital stock:
    Ordinary share, $1 par value,
    1,000,000 shares authorized,
    200,000 shares issued and
    outstanding $200,000
    Additional paid in capital:
    Share premium – Ordinary share 500,000
    Total paid in capital $700,000
    Retained Earnings 150,000
    Total stockholders equity $850,000


    If my company made the following transactions during the year:

    1) 4th April - The company declared and issued a 20% stock dividend. The market value
    of the share is $2.40.

    2) 8th November - The company declared a two-for-one stock split. The stock split is
    completed on the same day.

    JE for the above stock transactions are:

    DR
    0.2 X 200k X 2.4 = 96000
    CR
    96000

    DR
    500k / 2 = 250 k
    CR
    500k / 2 = 250 k

    Is this correct ?

    how do i actually make use of the above info to calculate stock dividend & stock split?

    What if I had a net income of 250k and paid cash dividends of 75k during the year? How shld i calculate the shareholders equity in the b/s as at 31 Dec 06 ??
    Is my answer correct??

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