The stockholders equity for Icy Pop Drive-Ins (IP) on December 31, 2010, follows:Stockholders’ EquityCommon stock, $0.30 par, 2,200,000 sharesauthorized, 400,000 shares issued…………………. $ 120,000Paid-in capital in excess of par common……….. 409,600Retained earnings………………………………………. 7,133,000Other equity……………………………………………… (185,000)Total stockholders equity……………………………. $7,477,600On August 15, 2011, the market price of IP common stock was $15 per share. Assume IP distributed a 20% stock dividend on this date.Requirements1. Journalize the distribution of the stock dividend.2. Prepare the stockholders equity section of the balance sheet after the stock dividend.3. Why is total stockholders equity unchanged by the stock dividend?4. Suppose IP had a cash balance of $590,000 on August 16, 2011. What is the maximum amount of cash dividends IP can declare?View Solution:
The stockholders equity for Icy Pop Drive Ins IP on December



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