Squash Delight Inc. has the following balance sheet:

Assets
Cash	$	35,000
Accounts receivable		267,000
Fixed assets		796,000
Total assets	$	1,098,000
Liabilities
Accounts payable	$	344,000
Notes payable		52,000
Common stock (100,000 shares @ $2 par)		200,000
Capital in excess of par		100,000
Retained earnings		402,000
Total liabilities & owners' equity	$	1,098,000

The firms stock sells for $11 a share. a. Show the effect on the capital accounts of a two-for-one stock split. (Do not round intermediate calculations and round your answers to the nearest whole dollar.)

Effect of stock split

Common Stock:

Capital excess of par:

Retained earnings:

Total equity $

b. Show the effect on the capital accounts of a 10 percent stock dividend. Part b is separate from part a. In part b do not assume the stock split has taken place. (Do not round intermediate calculations and round your answers to the nearest whole dollar.)

Effect of stock split

Common Stock:

Capital excess of par:

Retained earnings:

Total equity $

c. Based on the balance in retained earnings, which of the two dividend plans is more restrictive on future cash dividends?

	Stock split
	Stock dividend