Which occurs when a corporation's board of directors declares a 10% stock dividend?
Which of the following occurs when a corporation's board of directors declares a 10% stock dividend? Answers: A. Stock Dividends will be debited for the new shares times the current market value of the stock.
How does the board decide to pay dividends to shareholders?
The board must agree on the cash amount to be paid to the shareholders, both individually and in the aggregate. The board must also set a record date to determine which stockholders are entitled to receive the dividend, decide on the payment date, and notify the stockholders.
Who declares a dividend?
A: It is a company's board of directors who actually declares a dividend. The declaration date is the first of four important dates in the process of a company paying a dividend.
How much of the dividend is allocated to common stockholders?
The dividend is allocated $70,909 to preferred stockholders and $109,091 to common stockholders. C. The dividend is allocated $152,880 to preferred stockholders and $27,120 to common stockholders.
When the corporation Declares a stock dividend A stockholders percentage ownership?
Stock dividends do not affect the individual stockholder's percentage of ownership in the corporation. For example, a stockholder who owns 1,000 shares in a corporation having 100,000 shares of stock outstanding, owns 1% of the outstanding shares.
When a stock dividend is declared and issued?
A stock dividend is a way for a corporation to give something back to its stockholders that does not involve cash. Instead, the board of directors approves, then declares, the stock dividend, and each shareholder is issued additional shares based on their current holdings.
How would the declaration of a 15% share dividend by a corporation affect each of the following?
How would the declaration of a 15% stock dividend by a corporation affect each of the following? Retained earnings are debited in a stock dividend, and common stock and possibly additional paid‐in capital are credited.
How do you record the declaration of a stock dividend?
The journal entry to record the declaration of the cash dividends involves a decrease (debit) to Retained Earnings (a stockholders' equity account) and an increase (credit) to Cash Dividends Payable (a liability account).
What is the result of stock dividends?
The net effect of the stock dividend is simply an increase in the paid-in capital sub-account and a reduction of retained earnings. The total stockholder equity remains unchanged.
Are stock dividends declared a liability?
For Companies, Dividends Are Liabilities In fact, the declaration of a dividend creates a temporary liability for the company. When a dividend is declared, the total value is deducted from the company's retained earnings and transferred to a temporary liability sub-account called dividends payable.
What happens when the board of directors declared share split?
A stock split is a decision by a company's board of directors to increase the number of shares outstanding by issuing more shares to current shareholders. For example, in a 2-for-1 stock split, a shareholder receives an additional share for each share held.
What effect will the declaration and distribution of a stock dividend have on net income and cash flows?
The answer is A) no effect on net income or cash flows. Net income is revenues minus all expenses. So, it is not affected by any form of dividends,...
How would total shareholders equity be affected by the declaration of stock dividend and stock split?
Stock dividends have no effect on the total amount of stockholders' equity or on net assets. They merely decrease retained earnings and increase paid-in capital by an equal amount. Immediately after the distribution of a stock dividend, each share of similar stock has a lower book value per share.
What is a stock dividend quizlet?
Stock Dividend. A payment made by a firm to its owners in the form of stock, diluting the value of each share outstanding. Stock Split. An increase in a firm's shares outstanding without any change in owner's equity.
What is a stock dividend?
A dividend is the distribution of a company's earnings to its shareholders and is determined by the company's board of directors. Dividends are often distributed quarterly and may be paid out as cash or in the form of reinvestment in additional stock.
Which dividend is declared by the board of directors?
(iii) An interim dividend is declared by the Board of directors at any time before the closure of financial year, whereas a final dividend is declared by the members of a company at its annual general meeting if and only if the same has been recommended by the Board of directors of the Company.
What does it mean when a company's debt to equity ratio is greater than 1?
A. If the debt to equity ratio is greater than 1, the company is financing more assets with equity than with debt.
What is the stated rate of a bond?
B. The bond's stated rate is the same as the prevailing market rate at the time of sale.
How much would the paid in capital in excess of par common account increase?
C. The Paid-In Capital in Excess of Par—Common account would increase by $1,300.
What does higher debt to equity ratio mean?
D. The higher the debt to equity ratio, the lower the company's financial risk.
What happens to a bond at maturity?
B. At maturity, the bond will repay an amount that is greater than the face value.
Does Orleans pay dividends?
The preferred stock is cumulative, $100 par, with an 12% dividend rate. Orleans has not paid any dividends yet. In 2017, Orleans had its first profitable year, and on November 1, 2017, Orleans declared a total dividend of $63,000.
Is a bond secured by specific assets?
D. The bond is not secured by specific assets of the issuer.
What is dividend C?
C. The amount of dividends that were paid after the payment date
What is cumulative dividend?
A. The cumulative amount of dividends that were not paid in previous years
What is gross pay minus all deductions such as income tax withheld equals?
A. Gross pay minus all deductions such as income tax withheld equals net pay.
Do employers have to deposit net pay into the employee's bank account?
D. Employers are required to deposit net pay into the employee's bank account.
Should the possibility of liability be shown in the financial statements?
D. The possible liability should not be shown in the financial statements.
Why do companies pay dividends?
Companies often payout a portion of its profits as dividends to the shareholders. Dividend payouts are a way to provide shareholders with a return on their investment. The board of directors issues a declaration stating how much will be paid out and over what timeframe.
How does a dividend work?
How Declaring a Dividend Works. Before a cash dividend is declared and subsequently paid to shareholders, a company's board of directors must decide to pay the dividend and in what amount. The board must agree on the cash amount to be paid to the shareholders, both individually and in the aggregate. The board must also set a record date ...
What is the declaration date of a dividend?
The declaration date is the date on which a company officially commits to the payment of a dividend.
What is retained earnings?
The retained earnings is an account of equity that shows the net balance of a company's earnings. Since the retained earnings account is an equity account, dividend payments must be deducted from the account, reflecting the reduction in total shareholder equity.
When is the record date for dividends?
The record date usually occurs three business days after the ex-dividend date and is the date on which a company officially determines the shareholders of record, those who owned the stock prior to the ex-dividend date, who are eligible to receive the dividend payment. The payment date is the date the company sends out dividend payments ...
Do dividends have to be deducted from retained earnings?
Dividend payments must be deducted from the retained earnings account, which is an equity account, to reflecting the reduction in total shareholder equity.
What is capital _____?
Capital _____ is a general term that refers to any shares issued to obtain capital ( owner financing).
What are the disadvantages of corporate form of business?
Two of the biggest disadvantages of the corporate form of business are government regulation and corporate
What is market value per share?
The market value per share is the price at which stock is bought and sold. Which of the following factors does not influence market value?
Can a corporation pay a brokerage house to issue stock?
A corporation can pay a brokerage house to issue its stock. Some brokerage houses underwrite an indirect issuance of stock; they buy the stock from the corporation and resale it to investors.