Chapter 11 Stockholders’ Equity: Capital Stock and Dividends 533The board of directors is scheduled to meet January 6, 2008, to discuss the results of oper-
ations for 2007 and to consider the declaration of dividends for the fourth quarter of 2007. The
chairman of the board has asked for your advice on the declaration of dividends.- What factors should the board consider in deciding whether to declare a cash dividend?
- The board is considering the declaration of a stock dividend instead of a cash dividend.
Discuss the issuance of a stock dividend from the point of view of (a) a stockholder and
(b) the board of directors.
Select a public corporation you are familiar with or which interests you. Using the Internet, your
school library, and other sources, develop a short (two to five pages) profile of the corporation.
Include in your profile the following information:Assets
Current assets:
Cash $ 32,000
Marketable securities 300,000
Accounts receivable $ 73,200
Less allowance for doubtful accounts 5,200 68,000
Merchandise inventory 100,000
Prepaid expenses 3,600
Total current assets $ 503,600
Property, plant, and equipment:
Land $120,000
Buildings $760,000
Less accumulated depreciation 172,000 588,000
Equipment $368,000
Less accumulated depreciation 88,000 280,000
Total property, plant, and
equipment 988,000
Total assets $1,491,600Liabilities
Current liabilities:
Accounts payable $ 57,440
Notes payable (Cheyenne National Bank) 40,000
Salaries payable 2,560
Total current liabilities $ 100,000
Long-term liabilities:
Notes payable (Cheyenne National Bank) 360,000
Total liabilities $ 460,000Stockholders’ Equity
Paid-in capital:
Common stock, $20 par (50,000 shares
authorized, 20,000 shares issued) $400,000
Excess of issue price over par 32,000
Total paid-in capital $432,000
Retained earnings 599,600
Total stockholders’ equity 1,031,600
Total liabilities and stockholders’ equity $1,491,600Matterhorn Inc.
Balance Sheet
December 31, 2007Activity 11-6
Profiling a corporation