Problemon october 31 the stockholders equity section of, Ask an Expert

Accounting

Problem

On October 31, the stockholders' equity section of Pele Company's balance sheet consists of common stock $500,400 and retained earnings $412,300.

Pele is considering the following two courses of action:

(1) Declaring a 7% stock dividend on the 83,400 $6 par value shares outstanding
(2) Effecting a 2-for-1 stock split that will reduce par value to $3 per share.

The current market price is $17 per share.

Prepare a tabular summary of the effects of the alternative actions on the company's stockholders' equity and outstanding shares.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M92770442

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