Problem 10-08

A firm has the following balance sheet:

Assets				Liabilities and Equity
Cash	$	20,000		Accounts payable	$	20,000
Accounts receivable		153,000		Long-term debt		108,000
Inventory		95,500		Common stock ($7 par;		31,500
				4,500 shares outstanding)
Plant and equipment		190,000		Additional paid-in capital		156,000
				Retained earnings		143,000
		$458,500				$458,500

Construct a new balance sheet showing the impact of a two-for-one split. If the current market price of the stock is $54, what is the price after the split? Round the par value and the market price after the split to the nearest cent, the number of shares outstanding to the nearest whole number, and the other answers to the nearest dollar.

Assets				Liabilities and Equity
Cash		$		Accounts payable		$
Accounts receivable		$		Long-term debt		$
Inventory		$		Common stock ($ par;		$
				shares outstanding)
Plant and equipment		$		Additional paid-in capital		$
				Retained earnings		$
		$				$

Price of the common stock after the split: $

Construct a new balance sheet showing the impact of a 15 percent stock dividend. After the stock dividend, what is the new price of the common stock? Use the original balance sheet from the problem statement. Round the par value and the market price after the stock dividend to the nearest cent, the number of shares outstanding to the nearest whole number, and the other answers to the nearest dollar.

Assets				Liabilities and Equity
Cash		$		Accounts payable		$
Accounts receivable		$		Long-term debt		$
Inventory		$		Common stock ($ par;		$
				shares outstanding)
Plant and equipment		$		Additional paid-in capital		$
				Retained earnings		$
		$				$

Price of the common stock after the stock dividend: $