E12-14 On January 1,2008, Abdella Corporation had $1,000,000 of common stock outstand¬

ing that was issued at par. It also had retained earnings of $750,000. The company issued 60,000 shares of common stock at par on July 1 and earned net income of $400,000 for the year.

Instructions Journalize the declaration of a 15% stock dividend on December 10, 2008, for the following independent assumptions.

1. Par value is $10, and market value is $18.

2. Par value is $5, and market value is $20.

El 2-15 On October 31, the stockholders’ equity section of Omar Company consists of common stock $600,000 and retained earnings $900,000. Omar is considering the following two courses of action: (1) declaring a 5% stock dividend on the 60,000, $10 par value shares outstanding, or (2)

effecting a 2-for-l stock 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 stock¬

holders’ equity, outstanding shares, and book value per share. Use the following column head¬

ings: Before Action, After Stock Dividend, and After Stock Split.