Question

Question 5 3 pts Over the past eight years since its formation, when it listed its shares on the Toronto Stock Exchange, Baidu corporation has had a significant increase in its net income. Due to this success, the price of its 500,000 common shares tripled from $20 per share to $60 per share. During this period, the Common Shares account remained the same at $10 million. The Retained Earnings increase from $2 million to $13 million. Suppose, the president of the company Qi Lu is considering a 10% stock dividend and looking for help from COMM 293 students. Answer these questions AFTER the dividend is declared and distributed Do NOT use units, spaces or commas in your answer. To enter 1000000, simply enter 1000000 and not 1,000,000 or 1,000,000.00 a. What is the number of shares outstanding? b. What is the balance in the Common Shares account? $ c. What is the balance in the Retained Earnings account?-$

Answer 1

Q5)   a)	Number of shares outstanding = 500000 Shares
	( it is given in the question that there is no change in the number of common stock shares during the
	eight years period)
b)	Balance in common shares account
	$       1,00,00,000
	( this information is also given in the question. There are no Impact of
	dividend paid on common shareholders account)
c)	Calculation Of Balance InRetained Earning
	Retained Eanirng Before distribution of dividend					$       1,30,00,000
	Less: Dividend Paid					$           10,00,000
	($500000 shares * 20 par *10%)
	Balance In Retained Earning					$       1,20,00,000
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