Do It! Review 11-3b

Sunland Company has had 4 years of record earnings. Due to this success, the market price of its475,000shares of $4par value common stock has increased from $14per share to $51. During this period, paid-in capital remained the same at $5,700,000. Retained earnings increased from $4,275,000to $28,500,000. 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)

Sunland 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

$