Question

CALCULATOR PRINTER VERSION BACK NEXT Do It! Review 11-3b Your answer is partially correct. Try again. Wildhorse Co. has had 4 years of record earnings. Due to this success, the market price of its 455,000 shares of $2 par value common stock has increased from $15 per share to $54. During this period, paid-in capital remained the same at $2,730,000. Retained earnings increased from $2,047,500 to $13,650,000. 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. 1. Stock dividend retained earnings 9964500 2. 2-for-1 stock split - retained earnings 13650000 Wildhorse Co. Original Balance After Dividend After Split 2730000 Paid-in capital Retained earnings Total stockholder's equity 2730000 6415500 13650000 9964500 13650000 16380000 16380000 16380000 Shares outstanding 455000 ?? 18

Answer 1

	Original Balance	After Dividend	After split
Paid In Capital	2730000	6415500	2730000
Retained Earnings	13650000	9964500	13650000
Total Stckholders' Equity	16380000	16380000	16380000
Shares Outstanding	455000	523250	910000
		(455000+68250)	(455000*2)
No of shares	455000
Stock Dividend in shares (455000*15%)	68250
Value of stock dividend (68250*54)	3685500