At the end of the 20X4 fiscal year, the shareholders’ equity section of the statement of financial position of Chomney Corp. was as follows:

The board of directors was considering three alternatives:
Case 1 A 200% stock dividend for common shares, to be recorded as a memo entry.
Case 2 A 200% stock dividend to be recorded at the fair value of the common shares, or $11 per share.
Case 3 A 3-for-1 common stock split.

Required:
1. Prepare the shareholders’ equity section, in three columns, with each column reflecting one of the alternatives above.
2. Evaluate the alternatives, and indicate what course of action you would recommend to the board of directors.

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Shareholders' Equity Contributed Capital Share capital: Preferred shares, no par value, $1.25, cumulative and nonparticipating, unlimited shares authorized, 40,000 shares issued and outstanding Common shares, no par value, unlimited shares authorized, 366,000 shares issued and outstanding Other contributed capital: Common share retirement Total contributed capital Retained earnings AOCI for unrealized exchange gain on translation of foreign subsidiary Total Shareholders' Equity $ 1,000,000 2,675,000 45,900 3,720,900 12,001,000 90,500 $15,812,400