The shareholders equity for Best in Show Cinemas Ltd

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The shareholders equity for Best in Show Cinemas Ltd BSC

The shareholders' equity for Best in Show Cinemas Ltd. (BSC) (adapted) at December 31,
2016, appears as follows:

Shareholders' Equity

Common shares, 2,000,000 shares authorized,

500,000 shares issued.................................................................................. $1,012,000

Retained earnings......................................................................................... 7,122,000

Total shareholders' equity.......................................................................... $8,134,000

On April 15, 2017, the market price of BSC common shares was $17 per share. Assume BSC
declared a 10% stock dividend on this date and distributed the stock dividend on April 30.

Requirements

1. Journalize the declaration and distribution of the stock dividend.

2. Prepare the shareholders' equity section of the balance sheet after the stock dividend.

3. Why is total shareholders' equity unchanged by the stock dividend?

4. Suppose BSC had a cash balance of $540,000 on April 16, 2017. What is the maximum
amount of cash dividends BSC can declare?

The shareholders equity for Best in Show Cinemas Ltd BSC

ANSWER
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