Pegahmagabow Company has 250,000 common shares outstanding. The market price of $200 per share has made the shares unaffordable to certain investors. Because it wants to make the shares more widely available to all investors, the company is deciding whether to split its shares four-for-one or declare a 30% stock dividend.

Required

a. Which of the two options being considered would have the least impact on retained earnings and why?

b. Prepare the journal entry if the company decides to split its shares four-for-one.

c. Prepare the journal entries if the company decides to declare and issue a 30% stock dividend.

d. Which option would you recommend Pegahmagabow undertake to achieve their objective of making their shares more affordable?