On July 31, 1990, Fairey Corporation's common stock was selling for \(\$ 50\) per share, and the stockholders' equity section of the corporation's balance sheet appeared as follows:

Required 1. Assume the corporation declares and immediately issues a \(100 \%\) stock dividend and capitalizes the minimum required amount of retained earnings. Answer the following questions about the stockholders' equity of the corporation after the new shares are issued:

a. What is the retained earnings balance?

b. What is the total amount of stockholders' equity?

c. How many shares are outstanding?
2. Assume that instead of declaring a \(100 \%\) stock dividend, the corporation changes the par value of the stock to \(\$ 5\) and immediately effects a 2 for 1 stock split. Answer the following questions about the stockholders' equity of the corporation after the stock split takes place:
\(a\). What is the retained earnings balance?

b. What is the total amount of stockholders' equity?

c. How many shares are outstanding?
\section*{Exercise 13-3}
Treasury stock purchases (L.O. 2, 3)

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Common stock, $10 par value, 500,000 shares authorized, 10,000 shares issued $100,000 Contributed capital in excess of par value, common stock 20,000 Total contributed capital $120,000 Retained earnings. 200,000 Total stockholders' equity. $320,000