FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Transcribed Image Text:Carla Vista Co. has had 4 years of record earnings. Due to this success, the market price of its 470,000 shares of $2 par value common
stock has increased from $15 per share to $54. During this period, paid-in capital remained the same at $2,820,000. Retained earnings
increased from $4,230,000 to $28,200,000. CEO Don Ames is considering either (1) a 15% stock dividend or (2) a 2-for-1 stock split.
He asks you to show the before-and-after effects of each option on (a) retained earnings, (b) total stockholders' equity, and (c) par
value per share.
(a)
1.
Your answer is partially correct.
2.
Stock dividend-retained earnings
$
2-for-1 stock split retained earnings $
24,393,000
28,200,000
Transcribed Image Text:(b)
Paid-in capital
Retained earnings
Total stockholders' equity
Shares outstanding
(c)
1
2
$
Original Balances
Stock dividend par value per share
2-for-1 stock split-par value per share
$
$
After Dividend
After Split
000
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