E11-15 On October 31, the stockholders equity section of Omar Company consists of common stock $600,000 and retained earnings $900,000. Omar is considering the following two courses of action: (1) declaring a 5% stock dividend on the 60,000, $10 par value shares outstanding, or (2) effecting a 2-for-1 stock split that will reduce par value to $5 per share. The current market price is $14 per share. Instructions Prepare a tabular summary of the effects of the alternative actions on the components of stockholders equity and outstanding shares. Answer: Before After Stock After Stock Action Dividend Split Stockholders Equity: Paid in Capital Common stock amount Amount Amount In excess of par value amount Amount Amount Total Paid In Capital Amount Amount Amount Retained Earnings amount Amount Amount Total Stockholders Equity Amount Amount Amount Outstanding Shares Amount Amount Amount