Answer:
Only the retained earning changed from $460,000 before the dividend payment to $211,600 after the dividend payment. The total shareholders' equity remain at $1,564,000 before and after the dividend payment.
Explanation:
Note: The two questions (a) and (b) in the question are the same and they just one question which is answered as follows:
Before dividend payment
Common Stock = $1,104,000
Shares outstanding = $1,104,000 ÷ 8 = 138,000
Retained earning = $460,000
Total Stockholders' Equity = $1,104,000 + $460,000 = $1,564,000
After Dividend
Shares outstanding = 138,000 + (138,000 × 10%) = 138,000 + 13,000 = 151,800
Common Stock = $1,104,000 + (13,800 × 8) = $1,104,000 + $110,400 = $1,214,400
In excess of par value = 0 + (13,800 × 10) = $138,000
Total Paid-In Capital = $1,214,400 + $138,000 = $1,352,400
Retained Earnings = $460,000 - (13,800 × 18) = $460,000 - 248,400 = $211,600
Total Stockholders' Equity = $1,352,400 + $211,600 = $1,564,000
Concluding Note
From the above, only the retained earning changed from $460,000 before the dividend payment to $211,600 after the dividend payment. The total shareholders' equity remain at $1,564,000 before and after the dividend payment.
