Becker 7

Question 1

How are property Dividends Recorded?

Answer 1

Recorded at FMV and Retained earnings is decreased

Question 2

How is a liquidating Dividend accounted for?

Answer 2

Eliminate RE and any excess. The excess will be a Dr APIC.

Question 3

How does a stock dividend affect Retained Earnings?

Answer 3

If small Stock dividend (less than 25% then use FMV)

If large dividend (25%+ then use Par Value)

Each of these respective amounts is reduced from RE and added to Capital stock and APIC. (since it is a reclass there is no affect to SE)

Question 4

How do you calculate Outstanding shares?

Answer 4

Issued shares - Treasury stock + reissued treasury stock