Question
I need help with this problem. Wildhorse Co. has had 4 years of record earnings. Due to this success, the market price of its415,000shares of
I need help with this problem.
Wildhorse Co. has had 4 years of record earnings. Due to this success, the market price of its415,000shares of $4par value common stock has increased from $14per share to $51. During this period, paid-in capital remained the same at $4,980,000. Retained earnings increased from $3,735,000to $24,900,000. 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.
- Stock dividend - retained earnings
- 2-for-1 stock split - retained earnings
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