10-54 Meaning of Stock Splits and Dividends A January 31 announcement to shareholders of Premier Financial, a California savings and loan company, stated that the company had "good news" for stockholders. The announcement went on to explain that the board raised the quarterly cash dividend 12% and then declared a five-for- four stock split in the form of a 25% stock dividend. The additional shares were to be distributed on March 15 to shareholders of record on February 15 On March 16, the board approved a merger between Premier Financial and a large U.S. steel company. The agreement called for a cash payment of $33.60 on each outstanding United Financial share. The original offer (in early February) was $42 per share for the 5.8 million shares outstanding. 1. As a recipient of the letter of January 31, you were annoyed by the five-for-four stock split. Prepare a letter to the chairman indicating the reasons for your displeasure. 2. Prepare a response to the unhappy shareholder in requirement I. 3. A shareholder of Premier Financial wrote to the chairman in early March. .irm confused about the change in the agreed upon price per share. I owned 100 shares and thought I'd receive $4,200. 10-55 Stock Dividend and Fractional Shares before the dividend was as follows: Now the price has dropped from $42.00 to $33.60. Prepare a response to the sharcholder The Rupley Company declared and distributed a 5% stock dividend. The stockholders' equity Common stock, 5,000,000 shares, $1 par Additional paid-in capital Retained earnings Total stockholders' equity $5,000,000 20,000,000 50,000.000 $75,000,000 The market price of Ruptey's shares was $10 when the stock dividend was distributed. Rupley paid cash of $15,000 in lieu of issuing fractional shares 1. Prepare the journal entry for the declaration and distribution of the stock dividend. ldare' cquity section after the stock dividend on