Do It! Review 11-3b

Cullumber Company has had 4 years of record earnings. Due to this success, the market price of its 500,000 shares of $4 par value common stock has increased from $14 per share to $53. During this period, paid-in capital remained the same at $6,000,000. Retained earnings increased from $4,500,000 to $30,000,000. 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

1. Stock dividend - retained earnings $ 2. 2-for-1 stock split - retained earnings $

Cullumber Company Original Balance After Dividend After Split Paid-in capital $ $ $ Retained earnings Total stockholders equity $ $ $ Shares outstanding

(c)

1. Stock dividend - par value per share $ 2. 2-for-1 stock split - par value per share $