Garcia Corporation recently hired a new accountant with extensive experience in accounting for partnerships. Because of the pressure of the new job, the accountant was unable to review what he had learned earlier about corporation accounting. During the first month, he made the following entries for the corporation?s capital stock.

On October 31, the stockholders? equity section of Pele Company?s balance sheet consists of common stock $496,200and retained earnings $392,700. Pele is considering the following two courses of action:

(1)	Declaring a7% stock dividend on the82,700$6par value shares outstanding
(2)	Effecting a 2-for-1 stock split that will reduce par value to $3per share.

The current market price is $16per share. Prepare a tabular summary of the effects of the alternative actions on the company?s stockholders? equity and outstanding shares.

Garcia Corporation recently hired a new accountant with extensive experience in accounting for partnerships. Because of the pressure of the new job, the accountant was unable to review what he had learned earlier about corporation accounting. During the first month, he made the following entries for the corporation's capital stock. May Cash 2 Capital Stock (Issued 8,450 shares of $12 par value common stock at $14 per share) 10 Cash Capital Stock (Issued 11,940 shares of $16 par value preferred stock at $53 per share) 15 Capital Stock Cash (Purchased 540 shares of common stock for the treasury at $12 per share) 118,300 118,300 632,820 632,820 6,480 On the basis of the explanation for each entry, prepare the entries that should have been made for the capital stock transactions. (Record entries in the order displayed in the problem statement. Credit account titles are automatically indented when amount is entered. Do not indent manually.) 6,480 Date Account Titles and Explanation Debit Credit On October 31, the stockholders' equity section of Pele Company's balance sheet consists of common stock $496,200 and retained earnings $392,700. Pele is considering the following two courses of action: (1 Declaring a 7% stock dividend on the 82,700 $6 par value shares outstanding ) (2 Effecting a 2-for-1 stock split that will reduce par value to $3 per share. ) The current market price is $16 per share. Prepare a tabular summary of the effects of the alternative actions on the company's stockholders' equity and outstanding shares. Pele Company's Balance Sheet Before Action After Stock Dividend After Stock Split Stockholders' equity Paid-in capital $ $ $ $ $ $ Retained earnings Total stockholders' equity Outstanding shares