Effect of Stock Dividend on Milton's Current Liabilities | CFA® Level 1 Exam

Excerpts from the balance sheet of Milton Corporation as of April 30, 1997 are presented as follows:

Cash $725,000 Accounts receivable (net) $1,640,000 Inventories $2,945,000 Total current assets $5,310,000 Accounts payable $1,236,000 Accrued liabilities

$831,000 Total current liabilities $2,067,000

Cash $725,000 -

Accounts receivable (net) $1,640,000

Inventories $2,945,000 -

Total current assets $5,310,000 -

Accounts payable $1,236,000 -

Accrued liabilities $831,000 -

Total current liabilities $2,067,000

The board of directors of Milton met on May 5, 1997 and declared a quarterly cash dividend in the amount of $200,000 ($0.50 per share). The dividend was paid on May 28, 1997 to shareholders of record as of May 15, 1997. Assume that the only transactions that affected Milton during May 1997 were the dividend transactions. If the dividend declared by Milton had been a 10% stock dividend instead of a cash dividend, Milton's current liabilities would have been