Dividends, Stock Splits, and Stockholders’ Equity
The stockholders’ equity section of the balance sheet of Pittman Corporation as of December 31, 20×7, was as follows:
Pittman Corporation had the following transactions in 20×8:
Feb. 28 The board of directors declared a 10 percent stock dividend to stockholders of record on March 25 to be distributed on April 5. The market value on this date is $16.
Mar. 25 Date of record for stock dividend.
Apr. 5 Issued stock dividend.
Aug. 3 Declared a 2-for-1 stock split.
Nov. 20 Purchased 18,000 shares of the company’s common stock at $8 per share for the treasury.
Dec. 31 Declared a 5 percent stock dividend to stockholders of record on
January 25 to be distributed on February 5. The market value per share was $9.
Required
1. Record the stockholders’ equity components of the transactions for Pittman Corporation in T accounts.
2. Prepare the stockholders’ equity section of the company’s balance sheet as of December 31, 20×8. Assume net income for 20×8 is $108,000.
3. User Insight: If you owned 1,000 shares of Pittman stock on February 1, 20×8, how many shares would you own February 5, 20×9? Would your proportionate share of the ownership of the company be different on the latter date than it was on the former date? Explain your answer.