Question

Sammy’s Sportshops has been very profitable in recent years and has seen its stock price steadily increase to over $100 per share. The CFO thinks the company should consider either a 100% stock dividend or a 2-for-1 stock split.

Required:

1. Complete the following table comparing the effects of a 100% stock dividend versus a 2-for-1 stock split on the stockholders’ equity accounts, shares outstanding, par value, and share price. (Round "Par value per share" to 2 decimal places.

Required information (The following information applies to the questions displayed below.] Sammy's Sportshops has been very profitable in recent years and has seen its stock price steadily increase to over $100 per share. The CFO thinks the company should consider either a 100% stock dividend or a 2-for-1 stock split. Required: 1. Complete the following table comparing the effects of a 100% stock dividend versus a 2-for-1 stock split on the stockholders' equity accounts, shares outstanding, par value, and share price. (Round "Par value per share" to 2 decimal places.) Before After 100% Stock After 2-for-1 Dividend Stock Split $ 1,200 54,000 0 Common stock, $1 par value Additional paid-in capital Total paid-in capital Retained earnings Total stockholders' equity Shares outstanding Par value per share Share price 0 $ 55,200 23,350 $ 78,550 1,200 $ 1.00 $ 120

Answer 1

Table

	Before	After 100% Stock dividend	After 2 for 1 stock split
Common Stock $1 par value	1200	2400	1200
Additional paid in capital	54000	54000	54000
Total paid in capital	55200	56400	55200
Retained earnings	23350	22150	23350
Total Stockholder's equity	78550	78550	78550
Share outstanding	1200	2400	2400
Par value per share	1	1	0.50
Share price	120	120	60