Following Is the Shareholders' Equity Section of Morgan Supplies on a Day

question 4

Essay

Following is the shareholders' equity section of Morgan Supplies on a day its common stock is trading at $77 per share.
$\begin{array}{|l|r|}\hline \text { Common stock ( } \$ 2 \text { par value, } 30,000 \text { shares issued and outstanding) } & \$ 60,000 \\\hline \text { Additional paid-in capital on common stock } & 1,200,000 \\\hline \text { Retained earnings } & 3,000,000\end{array}$
Required:a.Use the financial statement template below to show the financial statement effects of
the following dividend events.(Assume that the events are independent.)
(1)Cash dividend declaration and payment of $1 per share
(2)Property dividend declaration and payment of shares representing a short-term
investment in Screen Products,Ltd.,with a fair value of $15,000
(3)10 percent stock dividend
(4)100 percent stock dividend
(5)3-for-1 stock split
(6)1-for-2 reverse stock split

Journal entry (optional):Journal entry (optional):
b.Which events changed the book value of common equity?
c.Under what conditions will these events lead to future increases and decreases in ROE?

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