Question

Required Information Problem 10-3A Indicate effect of stock dividends and stock splits (LO10-6) The following information applies to the questions displayed below Part 1 of 2 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 elther a 100 % stock dividend or a 2-for-1 stock split. 15 points Problem 10-3A Part 1 Skipped 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.) ebook After 100% After 2-for-1 Stock Spit Before Stock Dividend Common stock, $1 par value S 1200 Additional paid-in capital 39,000 erences Total paidin capital 40,200 0 Reained earnings 21850 62,050 Tol ockholdens equity 0S 0 Shares outstanding 1,200 Parvalue per share 1.00 Share price 90 3

Answer 1

Answer to Question 3. 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 Before 1,200 39,000 40,200 21,850 62,050 1,200 1.00 After 100% Stock After 2-for-1 Stock Dividend Split 2,400 1,200 39,000 39,000 41,400 40,200 20,650 21,850 62,050 62,050 2,400 2,400 1.00 0.50 45 90 45 After 100% Stock Dividend: The Stock Dividend will increase Common Stock and Decrease Retained Earnings by the amount of Current Value of Common Stock, as 100% Stock Dividend is declared The 100% Stock Dividend will double the Common Shares Outstanding. After 2-for-1 Stock Split: Two Shares will be issued for 1 share outstanding. The Stock dividend will change the par value of Common Stock and Share price.