Sammys Sportshops has been very profitable in recent years and has seen its stock price steadily increase to over $100 per share. The CFO thinks the company should consider either a 100% stock dividend or a 2-for-1 stock split.

1. Complete the following table comparing the effects of a 100% stock dividend versus a 2-for-1 stock split on the stockholders equity accounts, shares outstanding, par value, and share price. (Round "Par value per share" to 2 decimal places.)

2. The primary reason companies declare a large stock dividend or a stock split is to lower the trading price of the stock to a more acceptable trading range, making it attractive to a larger number of potential investors.

True or False?

Before After 100% Stock After 2-for-1 Dividend Stock Split Common stock, $1 par value Additional paid-in capital Total paid-in capital Retained earnings Total stockholders' equity Shares outstanding Par value per share Share price $ 1,200 42,0001 43,200 22,150 $ 65,350 1,200 $ 1.00 $ 96 0 $