Required
For each of the following numbered items, you are to select the lettered item(s) that indicate( s) its effect(s) on the corporation’s statements. If more than one effect is applicable to a particular item, be sure to indicate all applicable letters. (Assume that the state statutes do not permit declaration of nonliquidating dividends except from earnings.)
|
Item |
Effect |
|
1. Declaration of a cash dividend due in one month on noncumulative preferred stock |
a. Reduces working capital |
|
2. Declaration and payment of an ordinary stock dividend |
b. Increases working capital |
|
3. Receipt of a cash dividend, not previously recorded, on stock of another corporation |
c. Reduces current ratio |
|
4. Passing of a dividend on cumulative preferred stocks |
d. Increases current ratio |
|
5. Receipt of preferred shares as a dividend on stock held as a temporary investment. This was not a regularly recurring dividend. |
e. Reduces the dollar amount of total capital stock |
|
6. Payment of dividend mentioned in (1) |
f. Increases the dollar amount of total capital stock |
|
7. Issue of new common shares in a 5 for 1 stock split |
g. Reduces total retained earnings |
|
h. Increases total retained earnings |
|
|
i. Reduces equity per share of common stock |
|
|
j. Reduces equity of each common stockholder |