Carla Vista Co. has had 4 years of record earnings. Due to this success, the market price of its500,000shares of $4par value common stock has increased from $14per share to $55. During this period, paid-in capital remained the same at $6,000,000. Retained earnings increased from $4,500,000to $30,000,000. 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. 2-for-1 stock split - retained earnings (b) Carla Vista Co. 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 $