Squash Delight Inc. had the following balance sheet:

The firm has a market price of $10 a share.

a. Show the effect on the equity account(s) of a two-for-one stock split.
b. Show the effect on the equity account of a 10 percent stock dividend. Part b is separate from part a. In part b do not assume the stock split has taken place.

c. Based on the balance in retained earnings, which of the two dividend plans is more restrictive on future cash dividends?

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Assets $ 100,000 Cash 300,000 Accounts receivable... Capital assets... 600,000 $1,000,000 Total assets... Liabilities Accounts payable.. Notes payable ...... $ 150,000 50,000 Common stock 100,000 shares.. 300,000 Retained earnings... 500,000 $1,000,000