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Beta company had 62,000 shares of common stock issued and outstanding at January 1, 2021. during...

Beta company had 62,000 shares of common stock issued and outstanding at January 1, 2021. during 2021, beta took the following actions:

June 1 declared a 2-for-1 stock split, when the fair value of the stock was $37 per share

October 15 declared a $0.40 per share cash dividend

In beta's statement of shareholders' equity for 2021, what amount should beta report as dividends?

a. 74,000

b. 111,600

c. 24,800

d. 49,600

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Homework Answers

Answer #1

Amount to be reported as dividend by Beta for 2021 = Dividend per share x Total number of shares

=> Dividend to be reported for 2021 = $0.40 per share x 124,000 shares = $49,600

Hence, option d is the correct answer.

Calculation of total number of shares:

Shares outstanding as on January 1, 2021 = 62,000 shares

On June 1, a 2 for 1 stock split was declared. It means every shareholder holding 1 share will now be holding 2 shares.

Accordingly, total number of shares = 62,000 x 2 = 124,000 shares

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