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The common stock of Alexander Hamilton Inc. is currently selling at $120 per share. The directors wish to reduce the share price and increase share volume prior to a new issue. The per share par value is $10; book value is $70 per value. Nine million shares are issued and outstanding.

Instructions:

Prepare the necessary journal entries assuming the following.

a) The board votes a 2-for-1 stock split.

b) The board votes a 100% stock dividend

c) Briefly discuss the accounting and securities market differences between these two methods of increasing the number of shares outstanding.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M967346

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