Question

On June 30, 2017, Sharper Corporation’s common stock is priced at $28.50 per share before any stock dividend or split, and the stockholders’ equity section of its balance sheet appears as follows.

Common stock—$8 par value, 60,000 shares authorized, 24,000 shares issued and outstanding	$	192,000
Paid-in capital in excess of par value, common stock		100,000
Retained earnings		292,000
Total stockholders’ equity	$	584,000

1. Assume that the company declares and immediately distributes a 100% stock dividend. This event is recorded by capitalizing retained earnings equal to the stock’s par value. Answer these questions about stockholders’ equity as it exists after issuing the new shares.
a.,b.& c. Complete the below table to calculate the retained earnings balance, total stockholders’ equity and number of outstanding shares.
2. Assume that the company implements a 2-for-1 stock split instead of the stock dividend in part 1. Answer these questions about stockholders’ equity as it exists after issuing the new shares.
a.,b.& c. Complete the below table to calculate the retained earnings balance, total stockholders’ equity and number of outstanding shares.

Complete this question by entering your answers in the tabs below. Required 1 Required 2 Assume that the company declares and immediately distributes a 100% stock dividend. This event is recorded by capitalizing retained earnings equal to the stock's par value. Answer these questions about stockholders' equity as it exists after issuing the new shares. Complete the below table to calculate the retained earnings balance, total stockholders' equity and number of outstanding shares. Show lessA Impact of Stock Dividend Before Stock After Stock Stock Dividend Dividend Dividend Common stock Paid in capital in excess of par value Total contributed capital Retained earnings Total stockholders' equity Number of common shares outstanding <Required 1 Required 2

Answer 1

Table

Stock dividend	Before stock dividend	Impact of stock dividend	after stock dividend
Common Stock	192000	192000	384000
Paid in capital in excess of par	100000	0	100000
Total Contributed capital	292000	192000	484000
Retained earnings	292000	-192000	100000
Total Stockholder's equity	584000	0	584000
No of common share outstanding	24000	24000	48000

Table

Stock split	Before stock split	Impact of stock split	after stock split
Common Stock	192000	0	192000
Paid in capital in excess of par	100000	0	100000
Total Contributed capital	292000	0	292000
Retained earnings	292000	0	292000
Total Stockholder's equity	584000	0	584000
No of common share outstanding	24000	24000	48000