Answer:
The total equity will not change but, their composition will.
RE decrease by 180,000
common stock increase by 60,000
addtional paid in CS increase by 120,000
Missing information:
Given the attached equity. What is the effect of the 15% dividends on the equity and composition:
Explanation:
40,000 shares x 15% = 6,000 new shares
6,000 shares x $10 face value = 60,000
6,000 shares x $30 face value = 180,000
the difference will be considered additional paid-in
The company is paying the current stockholders with more shares. Thus; is doing a distribution of the earnings
Retained earnings will decrease by 180,000
while common stock and aditional paid in CS will increase in the same magnitude
