Question

Just prior to the end of the fiscal year, Biofuel Corporation reported the following information:

Common stock ($0.20 par value)
Additional paid-in capital
Retained earnings
Treasury stock
Cash flows from financing activities
§ 64,000
1,940,000
840,000
0
21,000
Required:
Complete the table below for each of the three following independent cases:
Note: Round "Par per share" answers to 2 decimal places.
Case 1: The board of directors declared a cash dividend of $0.02 per share.
Case 2: The board of directors declared and issued a 100 percent stock dividend when the stock was selling at $12 per share
Case 3: The board of directors announced a 2-for-1 stock split. The market price prior to the split was $14 per share.

Answer 1

In Case 1, the total dividend would be $1,280. In Case 2, the total value of the dividend would be $768,000. In Case 3, the new market price after the stock split would be $28 per share.

Step-by-step explanation:

In Case 1, the board of directors declared a cash dividend of $0.02 per share. To calculate the total dividend, we multiply the dividend per share by the number of shares outstanding. In this case, the total dividend would be $0.02 * 64,000 = $1,280.

In Case 2, the board of directors declared and issued a 100 percent stock dividend. This means that for each share of stock held, the shareholder received an additional share. Since the stock was selling at $12 per share, the total value of the dividend would be $12 * 64,000 = $768,000.

In Case 3, the board of directors announced a 2-for-1 stock split. This means that for each share of stock held, the shareholder received an additional share. Since the market price prior to the split was $14 per share, the new market price after the split would be $14 * 2 = $28 per share.