Bacon Inc. has the following stockholders’ equity section in its May 31, 2019, comparative balance sheets: May 31, 2019 April 30, 2019 Paid-in capital: Preferred stock, $120 par value, 9%, cumulative, 200,000 shares authorized, 140,000 shares issued and outstanding $ 16,800,000 $ 16,800,000 Common stock, $5 par value, 1,000,000 shares authorized, 600,000 and 540,000 shares issued, respectively
Bacon Inc. has the following
| May 31, 2019 | April 30, 2019 | |||||
| Paid-in capital: | ||||||
| $ | 16,800,000 | $ | 16,800,000 | |||
| Common stock, $5 par value, 1,000,000 shares authorized, 600,000 and 540,000 shares issued, respectively | ? | 2,700,000 | ||||
| Additional paid-in capital | 26,100,000 | 23,220,000 | ||||
| Retained earnings | 36,200,000 | 34,640,000 | ||||
| Less: |
(4,412,000 | ) | (4,148,000 | ) | ||
| Total stockholders' equity | $ | ? | $ | 73,212,000 | ||
e-2. Assume that on June 1 the board of directors declared a cash dividend of $0.60 per share on the outstanding shares of common stock. The dividend will be payable on July 15 to stockholders of record on June 15. Identify the impact this action will have on the June 30
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The June 30, 2019, balance sheet will reflect a reduction in retained earnings and an increase in dividends payable for the same amount.
The June 30, 2019, balance sheet will reflect a reduction in retained earnings and an increase in dividends payable for the same amount. -
The June 30, 2019, balance sheet will reflect a reduction in dividends payable and an increase in retained earnings for the same amount.
The June 30, 2019, balance sheet will reflect a reduction in dividends payable and an increase in retained earnings for the same amount. -
Dividends declared have no effect on the income statement.
Dividends declared have no effect on the income statement. -
Dividends declared will result in a reduction of net profit.
Dividends declared will result in a reduction of net profit.
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