Question

Doug Graves Cemetery had 53,000 shares of common stock issued and outstanding at January 1, 2021. During 2021, Graves took the following actions: June 1 Declared a 2-for-1 stock split, when the fair value of the stock was $28 per share. October 15 Declared a $0.40 per share cash dividend. In Graves's statement of shareholders' equity for 2021, what amount should Graves report as dividends

Answer 1

Answer:

The answer is given below;

Explanation:

Revised Stocks =53,000*2=106,000

Dividend per share=106,000*.4=$42,400

The $42,400 will be reported as dividend  as the number of shares outstanding have doubled due to stock split.

Answer 2

Answer:

$42,400

Explanation:

2-for-1 stock split implies that each shareholder now have one more share for each one they already have. Therefore we have:

Number of shares after the 2-for-1 stock split = 53,000 * 2 = 106,000 shares

Amount of dividend to report = 106,000 * $0.40 = $42,400.

Therefore, Graves should report $42,400 as dividends in its statement of shareholders' equity for 2021.