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Riff CD Company has had 4 years of record earnings. Due to this success, the market price of its 400,000 shares of $3 par value
Riff CD Company has had 4 years of record earnings. Due to this success, the market price of its 400,000 shares of $3 par value common stock has increased from $12 per share to $51. During this period, paid-in capital remained the same at $2,400,000. Retained earnings increased from $1,800,000 to $12,000,000. CEO Josh Borke is considering either (1) a 15% stock dividend or (2) a 2-for-1 stock split. He asks you to show the before-and-after effects of each option on (a) retained earnings and (b) total stockholders' equity. PAID-IN CAPITAL: Original Balance: ______ After dividend: _____ After Split: _____ RETAINED EARNINGS: Original Balance: _____ After dividend: _____ After Split: _____ TOTAL STOCKHOLDERS EQUITY: Originical Balance: _____ After dividend: _____ After Split: _____ SHARES OUTSTANDING: Original Balance: _____ After dividend: _____ After Split: ______
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