Do It! Review 11-3b

Ivanhoe Company has had 4 years of record earnings. Due to this success, the market price of its515,000shares of $2par value common stock has increased from $15per share to $52. During this period, paid-in capital remained the same at $3,090,000. Retained earnings increased from $2,317,500to $15,450,000. 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)

Ivanhoe Company

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

$