Question

Question 81 pts Doug Graves Company had 50,000 shares of common stock issued and outstanding at January 1, 2020. During 2020, Graves made the following transactions: June 1 Declared a 2-for-1 stock split, when the fair value of the stock was $25 per share. Oct 15 Declared a $0.40 per share cash dividend. In Graves's statement of shareholders' equity for 2020, what amount should Graves report as dividends

Answer 1

See below

Step-by-step explanation:

Given the above information, we will calculate first the revised stock

Revised stock

= 50,000 × $2

= 100,000

Then,

The Dividend par share

= 100,000 × $0.40

= $40,000

The sum of $40,000 will be reported as divided as the number of shares outstanding has doubled due to stock split