Exercise 13-6 Stock dividends and splits LO P2

On June 30, 2013, Sharper Corporations common stock is priced at $25.50 per share before any stock dividend or split, and the stockholders equity section of its balance sheet appears as follows.

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

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.

1.	Complete the below table to calculate the retained earnings balance, total stockholders equity and number of outstanding shares. (Amounts to be deducted should be indicated by a minus sign.)

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.

2.	Complete the below table to calculate the retained earnings balance, total stockholders equity and number of outstanding shares. (Amounts to be deducted should be indicated by a minus sign.)