Q. 02: Johore Trading Company has 2.4 million shares of common stock outstanding, and the present market price per share is $36. Its equity capitalization is as follows: Common Stock ($2 par value) Additional Paid-in-Capital Retained Earnings Total Shareholders' Equity $ 4,800,000 5,900,000 87,300,000 $ 98,000,000 A. If the company were to declare a 12 percent stock dividend, what would happen to these accounts? A 25 percent stock dividend? A 5 percent stock dividend? B. If, instead, the company declared a 3-for-2 stock split, what would happen to the accounts? A 2-for-1 stock split? A 3-for-1 split? C. What would happen if there were a reverse stock split of 1 for 4? 1 for 6? Solution