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?
