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On October 31, the stockholders' equity section of Carla Vista Company consists of common stock $290,000 and retained earnings $888,000. Carla Vista is considering
On October 31, the stockholders' equity section of Carla Vista Company consists of common stock $290,000 and retained earnings $888,000. Carla Vista is considering the following two courses of action: (1) declaring a 4% stock dividend on the 29,000, $10 par value shares outstanding, or (2) effecting a 2-for-1 stock split that will reduce par value to $5 per share. The current market price is $16 per share. Prepare a tabular summary of the effects of the alternative actions on the components of stockholders' equity, outstanding shares, an par value per share. Before After Stock After Stock Action Dividend Split Stockholders' equity Paid-in capital Common stock 290000 $ 301600 290000 In excess of par Total paid-in capital Retained earnings Total stockholders' equity $ +A Outstanding shares Par value per share +A 290000 888000 1178000 29000 10 $ GA +A 869440 30160 $ 10 +A 290000 888000 1178000 58000 5
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