April 1, 2015

Homework Help: Accounting

Posted by Silki on Wednesday, May 4, 2011 at 12:12pm.

Greenwood Corporation has paid 60 consecutive quarterly cash dividends
(15 years). The last 6 months have been a real cash drain on the company, however, as
profit margins have been greatly narrowed by increasing competition. With a cash balance
sufficient to meet only day-to-day operating needs, the president, Gil Mailor, has decided
that a stock dividend instead of a cash dividend should be declared. He tells Greenwood’s
financial vice-president, Vicki Lemke, to issue a press release stating that the
company is extending its consecutive dividend record with the issuance of a 5% stock
dividend. “Write the press release convincing the stockholders that the stock dividend is
just as good as a cash dividend,” he orders. “Just watch our stock rise when we announce
the stock dividend; it must be a good thing if that happens.”
(a) Who are the stakeholders in this situation?
(b) Is there anything unethical about President Mailor’s intentions or actions?
(c) What is the effect of a stock dividend on a corporation’s stockholders’ equity accounts?
Which would you rather receive as a stockholder—a cash dividend or a stock dividend?

Answer this Question

First Name:
School Subject:

Related Questions

Accounting - Presented below are selected financial statement items for Rowe ...
accounting - The Greenwood Company purchased equipment costing $900. Greenwood ...
accounts - On January 1, 2012, the organizers of the Parsons Corporation ...
Accounting - started the accounting period with $30000 in cash assets, $18000 of...
accounting cash flow - Hi, i have a problem with my statement of cash flow, I ...
Unit 4 - Investing - Compare a regular cash dividend with a periodic share ...
Accounting - My non-profit company received 4 parcels of land from another ...
Accounting - For each fiscal year 2003, 2002, and 2001, is the amount of cash ...
accounting - A company earned earned $39,000 in revenues and received $33,000 ...
Accounting - Pug Corporation has 10,000 shares of $10 par common stock ...