Question

14) Squash Delight Inc. has the following balance sheet:    Assets  Cash$35,000    Accounts receivable 290,000    Fixed assets 721,000        Total assets$1,046,000   Liabilities  Accounts payable$334,000    Notes payable 57,000    Common stock (140,000 shares @ $2 par) 280,000    Capital in excess of par 100,000    Retained earnings 275,000        Total liabilities & owners’ equity$1,046,000    The firm’s stock sells for $10 a share.
 a.Show the effect on the capital accounts of a two-for-one stock split. (Do not round intermediate calculations and round your answers to the nearest whole dollar.)
      Common stock$    Capital excess of par$    Retained earnings$      Total equity$     
 b.Show the effect on the capital accounts of a 10 percent stock dividend. Part b is separate from part a. In part b do not assume the stock split has taken place. (Do not round intermediate calculations and round your answers to the nearest whole dollar.)  
      Common stock$    Capital excess of par$    Retained earnings$      Total equity$       
 c.Based on the balance in retained earnings, which of the two dividend plans is more restrictive on future cash dividends?   Stock splitStock dividend

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