Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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of sha
ck split-
share to a
Data Table
ea 2
split. At th
quity accou
quity accou
plish Wicke
ight encou
Preferred Stock
Common Stock (300,000 shares at $1 par)
Paid-in capital in excess of par
Retained Earnings
300,000
800,000
2,160,000
quity accou
Total Stockholders' equity
$3,260,000
mmon stod
$31
Price per share
Earnings per share
Dividend per share
$3.60
$1.39
stock acco
capital in ex
Print
Done
Tearnings a
er(s).
expand button
Transcribed Image Text:of sha ck split- share to a Data Table ea 2 split. At th quity accou quity accou plish Wicke ight encou Preferred Stock Common Stock (300,000 shares at $1 par) Paid-in capital in excess of par Retained Earnings 300,000 800,000 2,160,000 quity accou Total Stockholders' equity $3,260,000 mmon stod $31 Price per share Earnings per share Dividend per share $3.60 $1.39 stock acco capital in ex Print Done Tearnings a er(s).
Home
Stock dividend versus stock split-Firm The board of Wicker Home Health Care, Inc., is exploring ways to expand the number of shares outstanding in an effort to
reduce the market price per share to a level that the firm considers more appealing to investors. The options under consideration are a 20% stock dividend and,
se Options alternatively, a 5-for-4 stock split. At the present time, the firm's equity account and other per-share information are given as follows:
a. Show the effect on the equity accounts and per-share data of a 20% stock dividend.
b. Show the effect on the equity accounts and per-share data of a 5-for-4 stock split.
c. Which option will accomplish Wicker's goal of reducing the current stock price while maintaining a stable level of retained earnings?
d. What legal constraints might encourage the firm to choose a stock split over a stock dividend?
ar
a. Show the effect on the equity accounts and per-share data of a 20% stock dividend.
shares. (Round to the nearest whole number.)
The number of shares of common stock after the dividend is
(Round to the nearest dollar.)
The balance in the common stock account after the dividend is $
(Round to the nearest dollar.)
The balance in the paid-in capital in excess of par account after the dividend is $
(Round to the nearest dollar.)
The balance in the retained earnings account after the dividend is $
Click to select your answer(s).
P Type here to search
expand button
Transcribed Image Text:Home Stock dividend versus stock split-Firm The board of Wicker Home Health Care, Inc., is exploring ways to expand the number of shares outstanding in an effort to reduce the market price per share to a level that the firm considers more appealing to investors. The options under consideration are a 20% stock dividend and, se Options alternatively, a 5-for-4 stock split. At the present time, the firm's equity account and other per-share information are given as follows: a. Show the effect on the equity accounts and per-share data of a 20% stock dividend. b. Show the effect on the equity accounts and per-share data of a 5-for-4 stock split. c. Which option will accomplish Wicker's goal of reducing the current stock price while maintaining a stable level of retained earnings? d. What legal constraints might encourage the firm to choose a stock split over a stock dividend? ar a. Show the effect on the equity accounts and per-share data of a 20% stock dividend. shares. (Round to the nearest whole number.) The number of shares of common stock after the dividend is (Round to the nearest dollar.) The balance in the common stock account after the dividend is $ (Round to the nearest dollar.) The balance in the paid-in capital in excess of par account after the dividend is $ (Round to the nearest dollar.) The balance in the retained earnings account after the dividend is $ Click to select your answer(s). P Type here to search
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