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On October 31, the stockholders' equity section of Acme Company's balance sheet consists of common stock $600,000 and retained earnings $400,000. Acme is considering the
On October 31, the stockholders' equity section of Acme Company's balance sheet consists of common stock $600,000 and retained earnings $400,000. Acme is considering the following two courses of action: (1) declaring and distributing a 10% stock dividend on the 60,000$10 par value shares outstanding or (2) affecting a 2-for-1 stock split that will reduce par value to $5 per share. The current market price is $15 per share. Prepare a tabular summary of the effects of the alternative actions on the company's stockholders' equity and outstanding shares. (Round book value per share to 2 decimal places, e.g. 15.25.)
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