On October 31, the stockholders’ equity section of Sunland Company consists of common stock $305,000 and retained earnings $891,000. Sunland is considering the following two courses of action: (1) declaring a 5% stock dividend on the 30,500, $10 par value shares outstanding, or (2) effecting a 2-for-1 stock split that will reduce par value to $5 per share. The current market price is $14 per share. Prepare a tabular summary of the effects of the alternative actions on the components of stockholders’ equity, outstanding shares, and par value per share.

Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter16: Retained Earnings And Earnings Per Share
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Problem 19P: Anoka Company reported the following selected items in the shareholders equity section of its...
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On October 31, the stockholders’ equity section of Sunland Company consists of common stock $305,000 and retained earnings $891,000. Sunland is considering the following two courses of action: (1) declaring a 5% stock dividend on the 30,500, $10 par value shares outstanding, or (2) effecting a 2-for-1 stock split that will reduce par value to $5 per share. The current market price is $14 per share.

Prepare a tabular summary of the effects of the alternative actions on the components of stockholders’ equity, outstanding shares, and par value per share.

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