Question
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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