CASE 4 (25 points)

The owners equity accounts for Vase Corporation are shown here:

Common stock (3 par value) Capital surplus Retained earnings Total owners equity

900,000 1,200,000 2,600,000 4,700,000

Instructions:

1. If the companys stock currently sells for 58 per share and a 15 percent stock dividend is declared, how many new shares will be distributed? Show how the equity accounts would change. (15 points)

2. Assume that instead of a stock dividend, the company declares a three-for-one stock split. How the equity accounts will change? How many shares are outstanding now? What is the new par value per share? (10 points)