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Crane Company has had 4 years of record earnings. Due to this success, the market price of its 385,000 shares of $2 par value common

Crane Company has had 4 years of record earnings. Due to this success, the market price of its 385,000 shares of $2 par value common stock has increased from $13 per share to $53. During this period, paid-in capital remained the same at $2,310,000. Retained earnings increased from $1,732,500 to $11,550,000. CEO Don Ames is considering either (1) a 15% 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 $enter a dollar amount

2. 2-for-1 stock split - retained earnings $enter a dollar amount

(b)

Crane Company

Original Balance

After Dividend

After Split

Paid-in capital

$enter a dollar amount

$enter a dollar amount

$enter a dollar amount

Retained earnings

enter a dollar amount

enter a dollar amount

enter a dollar amount

Total stockholders equity

$enter a total of the two previous amounts

$enter a total of the two previous amounts

$enter a total of the two previous amounts

Shares outstanding

enter a number of shares

enter a number of shares

enter a number of shares

(c)

1. Stock dividend - par value per share $enter a dollar amount

2. 2-for-1 stock split - par value per share $enter a dollar amount

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