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 cash dividend would be $1,280. In Case 2, the new number of shares outstanding would be 128,000. In Case 3, the new number of shares outstanding would be 128,000.

Step-by-step explanation:

In Case 1, when the board of directors declared a cash dividend of $0.02 per share, the total cash dividend would be calculated by multiplying the dividend per share by the number of shares outstanding. In this case, the dividend would be $0.02 x 64,000 = $1,280.

In Case 2, when the board of directors declared and issued a 100 percent stock dividend, the number of shares outstanding would double. Therefore, the new number of shares outstanding would be 2 x 64,000 = 128,000.

In Case 3, when the board of directors announced a 2-for-1 stock split, the number of shares outstanding would double as well. Therefore, the new number of shares outstanding would be 2 x 64,000 = 128,000.