The Stockholders' Equity Section of Augusta, Inc

question 87

Essay

The stockholders' equity section of Augusta, Inc. is as follows:
The market price of the stock on December 31, 2015, was $8 per share. Answer the following independent questions:
A Calculate the average amount at which each share of common stock was initially sold.
B What balance will be in the retained earnings account immediately after the declaration of a 2- for-1 stock split?
C If a cash dividend of $1 per share was declared to both common and preferred stockholders, what would be the balance in retained earnings immediately after the declaration?
D What balance will be in the retained earnings account immediately after the declaration of a 20% common stock dividend on December 31, 2015?

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Definitions:

Scientific Method

A systematic approach to research and experimentation that involves the formulation of a hypothesis, collection of data through observation and experimentation, and the formulation of conclusions based on the analysis of the data.

Cognitive Psychology

An area within psychology that explores cognitive functions such as perception, thought, memory, and learning in individuals.

Control Group

A group in an experiment that does not receive the treatment being tested and is used as a benchmark to measure how the other tested subjects do.

Experimental Group

The group in an experiment that receives the treatment or intervention being tested, as opposed to the control group which does not.