On June 30, 2009, Samson Corporation’s common stock is priced at $30.50 per share before...

On June 30, 2009, Samson Corporation’s common stock is priced at $30.50 per share before any stock

dividend or split, and the stockholders’ equity section of its balance sheet appears as follows.

1. Assume that the company declares and immediately distributes a 100% stock dividend. This event is

recorded by capitalizing retained earnings equal to the stock’s par value. Answer these questions

about stockholders’ equity as it exists after issuing the new shares.

a. What is the retained earnings balance?

b. What is the amount of total stockholders’ equity?

c. How many shares are outstanding?

2. Assume that the company implements a 2-for-1 stock split instead of the stock dividend in part 1.

Answer these questions about stockholders’ equity as it exists after issuing the new shares.

a. What is the retained earnings balance?

b. What is the amount of total stockholders’ equity?

c. How many shares are outstanding?

3. Explain the difference, if any, to a stockholder from receiving new shares distributed under a large

stock dividend versus a stock split.