Ch 17 - stock dividends and EPS

Question 1

When a stock dividend is issued (or stock split 2 to 1) anytime during the year…

Answer 1

…you update the balances from the beginning of the year

20% dividend = x 1.2

split 2 to one = x 2

Question 2

When you repurchase and/or retire shares

ex October 31 - repurchase 8,000 shares

Answer 2

8,000 x 2/12 = (1,333) => you subtract that amount

Question 3

$4, preferred dividend paid semi-annually

Answer 3

Be careful! - it means that at each date they pay $ 2

Question 4

When preferred shares are converted after paying dividends

Answer 4

Subtract form the net income only the preferred dividend that was paid

16,000 x $2 = 32,000

1,000 x $2 = _ 2,000_

                  34,000

Because 15,000 (out of 16,000) were converted in common shares on June 30.