At the end of 20X6, Home Ltd. reported the following in shareholders equity:

Common shares, no-par value; authorized, unlimited shares; issued, 14,470,000 shares	$	18,891,000
Retained earnings		52,920,000
	$	71,811,000

At this time, the shares were trading in the range of $3 to $5 per share on public stock markets. The companys board of directors is contemplating two alternative courses of action:

1. Declaring a 50% stock dividend, or
2. Executing a 3-for-2 stock split.

Required: 1. Prepare the shareholders equity section for each alternative, assuming that market value is used to capitalize the stock dividend.

2. What would the expected share price be assuming a share price of $4 for alternative 1 and a share price of $6 for alternative 2? (Round your answers to 2 decimal places.)

3-a. Which alternative would shareholders prefer?

3-b. Not available in Connect. 4. Which alternative would the company prefer?