Comparing Stock Dividends and Splits
Sally Corporation has 80,000 shares of common stock (par value $8) outstanding. Required:
Complete the following comparative tabulation based on two independent cases:
Case 1: The board of directors declared and issued a 40 percent stock dividend when the stock was selling at $15 per share. The dividend will be accounted for as a large stock dividend.
Case 2: The board of directors voted a 5-to-3 stock split (i.e., a 66.67 percent increase in the number of shares). The market price prior to the split was $ 15 per share.
Items | Before Dividend and Split | After Stock Dividend | After Stock Split |
Common stock account | $ | $ | $ |
Par per share | $8 | $ | $ |
Shares outstanding | # | # | # |
Capital in excess of par | $280,000 | $ | $ |
Retained earnings | $1,300,000 | $ | $ |
Total stockholders’ equity | $ | $ | $ |
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