Question

Do It! Review 11-3b Ivanhoe Company has had 4 years of record earnings. Due to this success, the market price of its 365,000 shares of $4 par value common stock has increased from $15 per share to $53. During this period, paid-in capital remained the same at $4,380,000. Retained earnings increased from $3,285,000 to $ 21,900,000. CEO Don Ames is considering either (1) a 15% stock dividend or (2) a 2-for-1 stock split. He asks you to show the before-and-after effects of each option on (a) retained earnings, (b) total stockholders' equity, and (c) par value per share. (a) 1. Stock dividend - retained earnings 2. 2-for-1 stock split - retained earnings (b) Ivanhoe Company Original Balance After Dividend After Split Paid-in capital Retained earnings Total stockholder's equity Shares outstanding 1. Stock dividend - par value per share 2. 2-for-1 stock split - par value per share Click if you would like to Show Work for this question: Open Show Work

Answer 1

-Answers page: 01 (a) w stock dividend - retained earnings =21900,000 - ( 365000x 15*4 * $ 53) = 21900000 - (12901450) = $18998250 (3 22-4814 - Stock Split - retained earnings = $ 21900006 (b) paid in capital original balance : 21900000+01900000 = $ 438000000 Retained earnings, $ 21900000 Total stockholder's equity - 43800000+ $ 21900000 = $ 26280000 shores out standing = 3635000 (given) After dividend ... Total stockholders equity - stock dividend - Retained carrin - $26280000 - [1899250

роде-02 = $ 24,380,450 Retained cornings after dividend = $ 18998250 Total stock holder's equity after dividend = 4 26280000 paid in copital after split = $ 4380000.00 Retained carrings after split = $ 21900000. Total stock holder's equüty of ter split - $ 26280000 shares outstanding after dividend - 15*1. +100°C. 115.1. * 100 = 1.15 X 365 000 -$419450 = 365000 X 2 outstandi shares (c) =+30000 stock dividend - par value per shore = 54 109 stock split - par value per shone - $4