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On October 31, the stockholders' equity section of Sunland Company's balance sheet consists of common stock $784,000 and retained earnings $408,000. Sunland is considering
On October 31, the stockholders' equity section of Sunland Company's balance sheet consists of common stock $784,000 and retained earnings $408,000. Sunland is considering the following two courses of action: (1) Declaring a 5% stock dividend on the 98,000 $8 par value shares outstanding (2) Effecting a 2-for-1 stock split that will reduce par value to $4 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. Sunland Company's Before Action Balance Sheet After Stock Dividend After Stock Split Stockholders' equity Paid-in capital +A $ Retained earnings Total stockholders' equity $ $ $ +A +A Outstanding shares +A +A
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