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1. Following is the shareholders equity section of Morgan Supplies on a day its common stock is trading at $77 per share.

Common stock ($2 par value, 30,000 shares issued and outstanding)	$ 60,000
Additional paid-in capital on common stock	1,200,000
Retained earnings	3,000,000

Required:

a. Use the financial statement template below to show the financial statement effects of

the following dividend events. (Assume that the events are independent.)

(1) Cash dividend declaration and payment of $1 per share

(2) Property dividend declaration and payment of shares representing a short-term

investment in Screen Products, Ltd., with a fair value of $15,000

(3) 10 percent stock dividend

(4) 100 percent stock dividend

(5) 3-for-1 stock split

(6) 1-for-2 reverse stock split

					Shareholders Equity
Entry	Assets	=	Liabilities	+	CC	+	AOCI	+	RE
1
2
3
4
5
6

Journal entry (optional):

b. Which events changed the book value of common equity?

c. Under what conditions will these events lead to future increases and decreases in ROE?

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