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Sheridan Company has had 4 years of record earnings. Due to this success, the market price of its 445,000 shares of $2 par value common
Sheridan Company has had 4 years of record earnings. Due to this success, the market price of its 445,000 shares of $2 par value common stock has increased from $15 per share to $51. During this period, paid-in capital remained the same at $2,670,000. Retained earnings increased from $2,002,500 to $13,350,000. CEO Don Ames 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, (b) total stockholders' equity, and (c) par value per share. (a) 1. Stock dividend - retained earnings $ 2. 2-for-1 stock split - retained earnings (b) Sheridan Company Original Balance After Dividend After Split Paid-in capital $ $ Retained earnings Total stockholder's equity $ $ Shares outstanding (c) 1. Stock dividend - par value per share 2. 2-for-1 stock split - par value per share
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