On October 31, the stockholders' equity section of Omar Company consists of common Compare effects of a

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On October 31, the stockholders' equity section of Omar Company consists of common Compare effects of a stock stock $600,000 and retained earnings $900,000. Omar is considering the following two courses dividend and a stock split.

of action: (1) declaring a 5% stock dividend on the 60.000, $10 par value shares outstanding, or (SO 5)

(2) effecting a 2-for-l slock split that will reduce par value to $5 per share. The current market price is $14 per share.

Instructions Prepare a tabular summary of the effects of the alternative actions on the components of stockholders*
equity, outstanding shares, and book value per share. Use the following column headings:
Before Action. After Stock Dividend, and After Stock Split.

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Financial Accounting Text Only

ISBN: 9780006575405

5th Edition

Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel

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