The common stock of Warner Inc. is currently selling at $110 per share. The directors wish to

Question:

The common stock of Warner Inc. is currently selling at $110 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. Five million shares are issued and outstanding. Prepare the necessary journal entries assuming the following.

(a) The board votes a 2-for-1 stock split.

(b) The board votes a 100% stock dividend.

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

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...