Blossom Company has had 4 years of record earnings. Due to this success, the market price of its360,000shares of $2par value common stock has increased from $12per share to $51. During this period, paid-in capital remained the same at $2,160,000. Retained earnings increased from $1,620,000to $10,800,000. CEO Don Ames is considering either (1) a15% stock dividend or (2) a 2-for-1 stock split. He asks you to show the before-and-after effects of each option on (a) retained earnings, (b) total stockholders' equity, and (c) par value per share.

(a)

1.Stock dividend - retained earnings $____

2-for-1 stock split - retained earnings $____

(b)Blossom Company

Original Balance After Dividend After Split

Paid-in capital $ $ $

Retained earnings $ $ $

Total stockholder's equity $ $ $

Shares outstanding $ $ $

(c)

1.Stock dividend - par value per share $______

2.2-for-1 stock split - par value per share $______

Skysong, Inc.currently has 770,000 shares of common stock outstanding. Skysong, Inc. is considering these two alternatives to finance its construction of a new $1.95 millionplant:

1.Issuance of195,000shares of common stock at the market price of $10per share.2.Issuance of $1.95 million,8% bonds at face value.

Complete the table.(Round earnings per share to 2 decimal places, e.g. $2.66.)

Issue Stock Issue Bonds

Income before interest and taxes $1,670,000 $1,670,000

Interest expense from bonds _____ ______

Income before income taxes _____ _____

Income tax expense (30%) ______ ______

Net income $______ $_____

Outstanding shares _____ 770,000

Earnings per share $ _____ $______

which alternative is preferable?