The owners’ equity accounts for Freya International are shown here: Common stock ($.40 par value) $ 44,000 Capital surplus 360,000 Retained earnings 788,120 Total...

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Finance

The owners’ equity accounts for Freya International are shownhere:

  Common stock ($.40 par value) $ 44,000
  Capital surplus 360,000
  Retained earnings 788,120
     Total owners’ equity $ 1,192,120

a-1 If Freya stock currently sells for $30 per share and a 10percent stock dividend is declared, how many new shares will bedistributed? (Do not round intermediatecalculations.)

  New shares issued

a-2 Show how the equity accounts would change. (Do notround intermediate calculations.)

  Common stock $
  Capital surplus
  Retained earnings
     Total owners’ equity $
b-1 If instead Freya declared a 20 percent stock dividend, how manynew shares will be distributed? (Do not round intermediatecalculations.)
  New shares issued
b-2 Show how the equity accounts would change. (Do notround intermediate calculations.)

  Common stock $
  Capital surplus
  Retained earnings
     Total owners’ equity $

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3.8 Ratings (702 Votes)

Required a-1
New Shares issued, if 10% stock dividend is declared

= (44,000/0.40)*10%
= 11,000 shares

Required a-2
Common stock ($.40 par value)	($44,000+(11,000*$0.4))	48,400
Capital surplus	($360,000+(11,000*($30-$0.40)))	6,85,600
Retained earnings	($788,120-$4,400-$325,600)	4,58,120

Total owners’ equity	$	11,92,120

Required b-1
New Shares issued, if 20% stock dividend is declared

= (44,000/0.40)*20%
= 22,000 shares

Required b-2
Common stock ($.40 par value)	($44,000+(22,000*$0.4))	52,800
Capital surplus	($360,000+(22,000*($30-$0.40)))	10,11,200
Retained earnings	($788,120-$8,800-$651,200)	1,28,120

Total owners’ equity	$	11,92,120

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Transcribed Image Text

The owners’ equity accounts for Freya International are shownhere: Common stock ($.40 par value)$44,000 Capital surplus360,000 Retained earnings788,120 Total owners’ equity$1,192,120 a-1If Freya stock currently sells for $30 per share and a 10percent stock dividend is declared, how many new shares will bedistributed? (Do not round intermediatecalculations.) New shares issued a-2Show how the equity accounts would change. (Do notround intermediate calculations.) Common stock$ Capital surplus Retained earnings Total owners’ equity$ b-1If instead Freya declared a 20 percent stock dividend, how manynew shares will be distributed? (Do not round intermediatecalculations.) New shares issued b-2Show how the equity accounts would change. (Do notround intermediate calculations.) Common stock$ Capital surplus Retained earnings Total owners’ equity$


Common stock ($.40 par value)	$	44,000
Capital surplus		360,000
Retained earnings		788,120

Total owners’ equity	$	1,192,120


Common stock	$
Capital surplus
Retained earnings

Total owners’ equity	$