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QUESTION 1 a) Kenneth owns the shares of Shop.Com Corporation. The board of the Shop.Com is discussing the payout policy for the year 2022. The board is considering for either distribute cash dividend, stock dividend or stock split for the shareholders. The Shop.Com common stocks currently sell for RM8 per share, while the Shop.Com Corporation has reported earnings available to common stockholders of RM95,000. Currently, the stockholder's equity account is as follows: Preferred stock Common stock (55,000 shares at RM2 par) Paid-in capital in excess of par Retained earnings Total stockholder's equity RM200,000 RM110,000 RM250,000 RM300,000 RM860,000 (i) Show the effects on the corporation of a cash dividend of RM0.80 per share. (4 marks) (ii) Show the effects on the corporation of a 5% stock dividend. (6 marks) Calculate the earnings per share pre- and post- payment of the stock dividend in part ii. (3 marks) (iv) How will the stockholder's equiry accous change if Shop.Com Corporation declares a l-for-4 reverse stock split (Present the details of the stockholder's equity account). (2 marks) QUESTION 1 a) Kenneth owns the shares of Shop.Com Corporation. The board of the Shop.Com is discussing the payout policy for the year 2022. The board is considering for either distribute cash dividend, stock dividend or stock split for the shareholders. The Shop.Com common stocks currently sell for RM8 per share, while the Shop.Com Corporation has reported earnings available to common stockholders of RM95,000. Currently, the stockholder's equity account is as follows: Preferred stock Common stock (55,000 shares at RM2 par) Paid-in capital in excess of par Retained earnings Total stockholder's equity RM200,000 RM110,000 RM250,000 RM300,000 RM860,000 (i) Show the effects on the corporation of a cash dividend of RM0.80 per share. (4 marks) (ii) Show the effects on the corporation of a 5% stock dividend. (6 marks) Calculate the earnings per share pre- and post- payment of the stock dividend in part ii. (3 marks) (iv) How will the stockholder's equiry accous change if Shop.Com Corporation declares a l-for-4 reverse stock split (Present the details of the stockholder's equity account). (2 marks)

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