Problem 10-3A (Algo) Indicate effect of stock dividends and stock splits (LO10-6) Bob's Golf Emporium has been very profitable in recent years and has seen its stock price steadily increase to over $100 per share. The CFO thinks the company should consider either a 100% stock dividend or a 2-for-1 stock split. Required: 1. Complete the following table comparing the effects of a 100% stock dividend versus a 2-for-1 stock split on the stockholders' equity accounts, shares outstanding, par value, and share price. 2. State whether the statement "The primary reason companies declare a large stock dividend or a stock split is to lower the trading price of the stock to a more acceptable trading range, making it atractive to a larger number of potential investors." is true or false. Complete the following table comparing the effects of a 100% stock dividend versus a 2-for-1 stock split on the stockholders' equity accounts, shares outstanding, par value, and share price. (Round "Par value per share" to 2 decimal places.) Common stock, $1 par value Additional paid-in capital Total paid-in capital Retained earnings Total stockholders' equity Shares outstanding Par value per share. Share price Before $1,000 49,000 50,000 22,850 $72,850 $ $ 1,000 1.00 110 After 100% Stock Dividend After 2-for-1 Stock Split
Problem 10-3A (Algo) Indicate effect of stock dividends and stock splits (LO10-6) Bob's Golf Emporium has been very profitable in recent years and has seen its stock price steadily increase to over $100 per share. The CFO thinks the company should consider either a 100% stock dividend or a 2-for-1 stock split. Required: 1. Complete the following table comparing the effects of a 100% stock dividend versus a 2-for-1 stock split on the stockholders' equity accounts, shares outstanding, par value, and share price. 2. State whether the statement "The primary reason companies declare a large stock dividend or a stock split is to lower the trading price of the stock to a more acceptable trading range, making it atractive to a larger number of potential investors." is true or false. Complete the following table comparing the effects of a 100% stock dividend versus a 2-for-1 stock split on the stockholders' equity accounts, shares outstanding, par value, and share price. (Round "Par value per share" to 2 decimal places.) Common stock, $1 par value Additional paid-in capital Total paid-in capital Retained earnings Total stockholders' equity Shares outstanding Par value per share. Share price Before $1,000 49,000 50,000 22,850 $72,850 $ $ 1,000 1.00 110 After 100% Stock Dividend After 2-for-1 Stock Split
Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Gary A. Porter, Curtis L. Norton
Chapter11: Stockholders' Equity
Section: Chapter Questions
Problem 11.4AP
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