In the past year, Gosser Corporation declared a 10% stock dividend, and Jenks, Inc. announced a 2-for-1 stock split. Your parents own 100 shares of each company’s $50 par value common stock. During a recent phone call, your parents ask you, as an accounting student, to explain the diff erences between the two events.

Instructions

Write a letter to your parents that explains the effects of the two events on them as stockholders and the effects of each event on the financial statements of each corporation.