Prepare journal entry to record the given transaction: (a) The date of declaration. (b) The date of issuance.

Question

Dynatech Inc. is considering one of the three following courses of action: (1) paying a $0.40 cash dividend, (2) distributing a 6% stock dividend, or (3) effecting a 2-for-1 stock split. The current share price is $13 per share. Help Dynatech make its decision by completing the following chart (treat each possibility independently): Total assets Total liabilities Shareholders' equity Common shares Retained earnings Total shareholders' equity Total liabilities and shareholders' equity Number of common shares Before Action $1,211,000 $ $262,000 $ 554,000 395,000 949,000 $1,211,000 100,000 $ (1) After Cash Dividend $ $ $ (2) After Stock Dividend $ $ $

Answer 1

Question

Chapter 16, Problem 5P

1.

To determine

Prepare journal entry to record the given transaction:

(a) The date of declaration.

(b) The date of issuance.

2.

To determine

Calculate the balances in the shareholder’s equity accounts after the issuance are being made.

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Dynatech Inc. is considering one of the three following courses of action: (1) paying a $0.40 cash dividend, (2) distributing a 6% stock dividend, or (3) effecting a 2-for-1 stock split. The current share price is $13 per share. Help Dynatech make its decision by completing the following chart (treat each possibility independently): Total assets Total liabilities Shareholders' equity Common shares Retained earnings Total shareholders' equity Total liabilities and shareholders' equity Number of common shares Before Action $1,211,000 $ $262,000 $ 554,000 395,000 949,000 $1,211,000 100,000 $ (1) After Cash Dividend $ $ $ (2) After Stock Dividend $ $ $

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