Hello. I need help with the following question please. The Sweet Times Candy Company has the following equity accounts on its balance sheet: Common stock ($3 par, 480,000 shares)$1,440,000Contributed capital in excess of par 1,500,000Retained earnings 15,060,000 Total common stockholders’ equity$18,000,000 The current market price of the firm’s shares is $45.If the firm declares a 5 percent stock dividend, what will be the impact on the firm’s equity accounts? Round your answers to the nearest dollar. Common stock ($3 par, 504,000 shares)$ Contributed capital in excess of par$ Retained earnings$ Total common stockholders’ equity$ If the firm currently pays no cash dividend, what is the impact of a 5 percent stock dividend on the wealth position of the firm’s existing stockholders?The wealth position of existing shareholders will (Stay the same / increase by 5% / decline by 5%.3. If the firm currently pays a cash dividend of $3 per share and this per share dividend rate does not change after the 5 percent stock dividend, what impact would you expect the stock dividend to have on the wealth position of existing shareholders?The wealth position of existing shareholders is expected to (Increase / Decrease).

Information Provided: Common stock = $1,440,000 Contributed capital = 1,500,000 Retained earnings =…

Answered: If the firm declares a 5 percent stock…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter15: Dividend Policy

Section: Chapter Questions

Problem 11P

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Hello. I need help with the following question please.

The Sweet Times Candy Company has the following equity accounts on its balance sheet:


Common stock ($3 par, 480,000 shares)	$	1,440,000
Contributed capital in excess of par		1,500,000
Retained earnings		15,060,000
Total common stockholders’ equity	$	18,000,000

The current market price of the firm’s shares is $45.

If the firm declares a 5 percent stock dividend, what will be the impact on the firm’s equity accounts? Round your answers to the nearest dollar.

Common stock ($3 par, 504,000 shares) $

Contributed capital in excess of par $

Retained earnings $

Total common stockholders’ equity $

If the firm currently pays no cash dividend, what is the impact of a 5 percent stock dividend on the wealth position of the firm’s existing stockholders?
The wealth position of existing shareholders will (Stay the same / increase by 5% / decline by 5%.

3. If the firm currently pays a cash dividend of $3 per share and this per share dividend rate does not change after the 5 percent stock dividend, what impact would you expect the stock dividend to have on the wealth position of existing shareholders?
The wealth position of existing shareholders is expected to (Increase / Decrease).

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Common stock ($3 par, 504,000 shares)	$
Contributed capital in excess of par	$
Retained earnings	$
Total common stockholders’ equity	$