The Howe Company’s stockholders’ equity account follows: Common stock (400,000 shares at $4 par) $1,600,000Paid-in capital in excess of par 1,000,000Retained earnings 1,900,000Total stockholders’ equity $4,500,000

The Howe Company’s stockholders’ equity account follows: Common stock (400,000 shares at $4 par) $1,600,000Paid-in capital in excess of par 1,000,000Retained earnings 1,900,000Total stockholders’ equity $4,500,000The earnings available for common stockholders from this period’s operations are $100,000, which have been included as part of the $1.9 million retained earnings.a) What is the maximum dividend per share that the firm can pay? (Assume that legalcapital includes all paid-in capital.)b) If the firm has $160,000 in cash, what is the largest per-share dividend it can pay without borrowing?c) Indicate the accounts and changes, if any, that will result if the firm pays the dividend indicated in parts a and b.d) Indicate the effects of an $80,000 cash dividend on stockholders’ equity.

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The Howe Company’s stockholders’ equity account follows: Common stock (400,000 shares at $4 par) $1,600,000Paid-in capital in excess of par 1,000,000Retained earnings 1,900,000Total stockholders’ equity $4,500,000
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