Stock Split:
One share is converted into 4 shares. (1:4) No of Share: 50,000 X 4 = 2,00,000 no of share Per Share Price: 100 / 4 = Tk. 25
Capital Surplus: 40/4 = Tk. 10 Restructuring of Capital Structure:
Particulars Tk.
Common Stock (2,00,000 shares * Tk. 25) 50,00,000 Capital Surplus (2,00,000 shares * 10) 20,00,000
Preferred Stock 40,00,000
Reserve and Surplus 30,00,000
Long term Debt 20,00,000
Total Capital 1,60,00,000
Stock Dividend
Ashkenazi Companies has the following stockholders’ equity account:
Common stock (3,50,000 shares at Tk. 3 par) 10,50,000 Paid-in capital in excess of par 25,00,000
Retained earnings 75,00,000
Total stockholders’ equity 1,10,50,000
Restructure the capital structure if, the company declares a) 1:1 dividend b) 20%
dividend
Option 1: (If the company declares a 1:1 bonus share) No of Share (1+1) = 2
New no of share: 3,50,000 * 2 = 7,00,000 no of share
Paid in capital in excess of par (Capital Surplus or Share Premium):
Book value/No. of Share 25,00,000/ 3,50,000 = Tk. 7.14
Common stock (21,00,000-10,50,000) = Tk. 10,50,000 Paid in capital (50,00,000 – 25,00,000) = Tk. 25,00,000
Retain Earnings (75,00,000 -10,50,000 – 25,00,000) = Tk. 39,50,000 Restructuring of Capital Structure:
Particulars Tk.
Common Stock (7,00,000 * Tk. 3) 21,00,000
Paid in capital in excess of par (7,00,000* Tk. 7.14)
50,00,000
Retain Earnings 39,50,000
Total Capital 1,10,50,000
Option 2:
New Shares after declaration, (3,50,000 X 20%) = 70,000 shares Total New No of Shares, (3,50,000 + 70,000) = 4,20,000 shares Common stock increased by, (12,60,000 -10,50,000) = Tk. 2,10,000 Paid in Capital increased by, (29,98,800 - 25,00,000) = Tk. 4,98,800
Retain Earnings decreased by, (75,00,000 – 2,10,000 – 4,98,800) = Tk. 67,91,200 Restructuring of Capital Structure:
Particulars Tk.
Common Stock (4,20,000 * Tk. 3) 12,60,000
Paid in capital in excess of par (4,20,00,000* Tk. 7.14) 29,98,800
Retain Earnings 67,91,200
Total Capital 1,10,50,000
