Reference no: EM132609216
Question - The condensed balance sheet of Blossom Corporation reports the following:
BLOSSOM CORPORATION Balance Sheet (partial) June 30, 2021
Total assets $12,730,000
Liabilities and shareholders' equity
Total liabilities $4,624,000
Shareholders' equity
Common shares, unlimited number authorized, 378,000 issued 2,268,000
Retained earnings 5,838,000
Total shareholders' equity 8,106,000
Total liabilities and shareholders' equity $12,730,000
The market price of the common shares is currently $24 per share. Blossom wants to assess the impact of three possible alternatives on the corporation and its shareholders. The alternatives are:
1. Payment of a $1.49 per share cash dividend
2. Distribution of a 4% stock dividend
3. A 3-for-1 stock split
a. For each alternative, determine the impact on (1) assets, (2) liabilities, (3) common shares, (4) retained earnings, (5) total shareholders' equity, and (6) the number of shares.
b. Assume a Blossom shareholder currently owns 1,000 common shares at a cost of $22,000. What is the impact of each alternative for the shareholder, assuming that the shares' market price changes proportionately with the alternative?