Stock Dividends versus Stock Splits

Campbell Company wants to increase the number of shares of its common stock outstanding and is considering a stock dividend versus a stock split. The Stockholders' Equity section of the firm's most recent balance sheet appeared as follows:

Common stock, $10 par, 50,600 shares issued and outstanding	$506,000
Additional paid-in capital	860,200
Retained earnings	880,100
Total stockholders' equity	$2,246,300

If a stock dividend is chosen, the firm wants to declare a 100% stock dividend. Because the stock dividend qualifies as a "large stock dividend," it must be recorded at par value. If a stock split is chosen, Campbell will declare a 2-for-1 split.

Required:

1. Compare the effects of the stock dividends and stock splits on the accounting equation. If an amount is zero, enter "0". Indicate whether the assets, liabilitiies and stockholders' equity increases/decreases/has no effect based on stock dividend and stock split and the amount each item is affected by.

2. a. Develop the Stockholders' Equity category of Campbell's balance sheet after the stock dividend.

2. b. Develop the Stockholders' Equity category of Campbell's balance sheet after the stock split.