Exercise 13-5 Stock dividends and splits LO P2

On June 30, 2017, Sharper Corporations common stock is priced at $28.50 per share before any stock dividend or split, and the stockholders equity section of its balance sheet appears as follows.

1. Assume that the company declares and immediately distributes a 100% stock dividend. This event is recorded by capitalizing retained earnings equal to the stocks par value. Answer these questions about stockholders equity as it exists after issuing the new shares. a.,b.& c. Complete the below table to calculate the retained earnings balance, total stockholders equity and number of outstanding shares. 2. Assume that the company implements a 2-for-1 stock split instead of the stock dividend in part 1. Answer these questions about stockholders equity as it exists after issuing the new shares. a.,b.& c. Complete the below table to calculate the retained earnings balance, total stockholders equity and number of outstanding shares.

Common stock-$8 par value, 85,000 shares authorized, 34,000 shares issued and outstanding Paid-in capital in excess of par value, common stock Retained earnings $272,000 100,000 372,000 Total stockholders' equity $ 744,000