Problem Sets: Dividends and Taxes
Problem 17-1 Dividends and Taxes [LO2]
Dark Day, Inc., has declared a $5.60 per share dividend. Suppose capital gains are not taxed, but dividends are taxed at 15 percent. New IRS regulations require that taxes be withheld at the time the dividend is paid. Dark Day sells for $94.10 per share, and the stock is about to go ex-dividend. What do you think the ex-dividend price will be? (Round your answer to 2 decimal places. (e.g., 32.16)) Ex-dividend price
$
Problem 17-2 Stock Dividends [LO3]
The owners’ equity accounts for Alexander International are shown here:
Common stock ($0.60 par value)
$
45,000 Capital surplus 340,000 Retained earnings 748,120
Total owners’ equity
$
1,133,120
a-1
If Alexander stock currently sells for $30 per share and a 10 percent stock dividend is declared, how many new shares will be distributed? New shares issued
a-2
Show how the equity accounts would change.
Common stock
$
Capital surplus Retained earnings
Total owners’ equity
$
b-1
If instead Alexander declared a 20 percent stock dividend, how many new shares will be distributed?
New shares issued
b-2
Show how the equity accounts would change. (Negative amount should be indicated by a minus sign.)
Common stock
$
Capital surplus Retained earnings
Total owners’ equity
$
Problem 17-3 Stock Splits [LO3]
The owners' equity accounts for Alexander International are shown here.
Common stock ($0.50 par value)
$
35,000 Capital surplus 320,000 Retained earnings 708,120
Total owners’ equity
$
1,063,120
a-1
If Alexander declares a five-for-one stock split, how many shares are outstanding now? New shares outstanding
a-2
What is the new par value per share? (Round your answer to 3 decimal places. (e.g., 32.161)) New par value
$ per share b-1
If Alexander declares a one-for-seven reverse
Dark Day, Inc., has declared a $5.60 per share dividend. Suppose capital gains are not taxed, but dividends are taxed at 15 percent. New IRS regulations require that taxes be withheld at the time the dividend is paid. Dark Day sells for $94.10 per share, and the stock is about to go ex-dividend. What do you think the ex-dividend price will be? (Round your answer to 2 decimal places. (e.g., 32.16)) Ex-dividend price
$
Problem 17-2 Stock Dividends [LO3]
The owners’ equity accounts for Alexander International are shown here:
Common stock ($0.60 par value)
$
45,000 Capital surplus 340,000 Retained earnings 748,120
Total owners’ equity
$
1,133,120
a-1
If Alexander stock currently sells for $30 per share and a 10 percent stock dividend is declared, how many new shares will be distributed? New shares issued
a-2
Show how the equity accounts would change.
Common stock
$
Capital surplus Retained earnings
Total owners’ equity
$
b-1
If instead Alexander declared a 20 percent stock dividend, how many new shares will be distributed?
New shares issued
b-2
Show how the equity accounts would change. (Negative amount should be indicated by a minus sign.)
Common stock
$
Capital surplus Retained earnings
Total owners’ equity
$
Problem 17-3 Stock Splits [LO3]
The owners' equity accounts for Alexander International are shown here.
Common stock ($0.50 par value)
$
35,000 Capital surplus 320,000 Retained earnings 708,120
Total owners’ equity
$
1,063,120
a-1
If Alexander declares a five-for-one stock split, how many shares are outstanding now? New shares outstanding
a-2
What is the new par value per share? (Round your answer to 3 decimal places. (e.g., 32.161)) New par value
$ per share b-1
If Alexander declares a one-for-seven reverse