Question
Monty Corp. has had 4 years of net income. Due to this success, the market price of its 380,000 shares of $6 par value common
Monty Corp. has had 4 years of net income. Due to this success, the market price of its 380,000 shares of $6 par value common stock has increased from $10 per share to $52. During this period, paid-in capital remained the same at $4,380,000. Retained earnings increased from $1,840,000 to $12,300,000. President E. Rife is considering either a 17% stock dividend or a 2-for-1 stock split.
He asks you to show the before-and-after effects of each option on retained earnings.
Retained earnings after stock dividend : |
Retained earnings after stock split:
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