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On October 31, the stockholders' equity section of Oriole Company consists of common stock $340,000 and retained earnings $898,000. Oriole is considering the following two
On October 31, the stockholders' equity section of Oriole Company consists of common stock $340,000 and retained earnings $898,000. Oriole is considering the following two courses of action: (1) declaring a 5% stock dividend on the 34,000, $10 par value shares outstanding, or (2) effecting a 2-for-1 stock split that will reduce par value to $5 per share. The current market price is $14 per share. Prepare a tabular summary of the effects of the alternative actions on the components of stockholders' equity, outstanding shares, and par value per share. Before Action After Stock Dividend After Stock Split Stockholders' equity Paid-in capital Common stock $ $ $ In excess of par 0 6,800 0 E EX x Total paid-in capital E X X Retained earnings X X Total stockholders' equity $ Outstanding shares 34000 35700 68000 Par value per share 10 10
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