Comparing Stock Dividends and Splits
On July 1, 2011, Davidson Corporation had the following capital structure:
Common stock (par $3) | $600,000 |
Capital in excess of par | 900,000 |
Retained earnings | 700,000 |
Treasury stock | – 0 – |
Required:
Complete the following comparative tabulation based on two independent cases:
Case 1: The board of directors declared and issued a 50 percent stock dividend when the stock was selling at $5 per share.
Case 2: The board of directors voted a 6-to-5 stock split (i.e., a 20 percent increase in the number of shares). The market price prior to the split was $5 per share.
Items | Before Dividend and Split | After Stock Dividend | After Stock Split |
Common stock account | $ | $ | $ |
Par per share | $3 | $ | $ |
Shares outstanding | # | # | # |
Capital in excess of par | $900,000 | $ | $ |
Retained earnings | $700,000 | $ | $ |
Total stockholders' equity | $ | $ | $ |
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