The common stock of Rainer, Inc. is currently selling at $120 per share. The directors wish to reduce the share price and increase share volume prior to a new issue. The per share par value is $10; book value is $70 per share. Nine million shares are issued and outstanding.

Required:

Prepare the necessary journal entries assuming the following.

(a) The board declares and issues a 2-for-1 stock split.

(b) The board declares and issues a 100% stock dividend.

(c) Briefly discuss the accounting and securities market differences between these two methods of increasing the number of shares outstanding.