FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Subject: acounting 

On October 31, the stockholders' equity section of Wildhorse Company consists of common stock $300,000 and retained earnings
$890,000. Wildhorse is considering the following two courses of action: (1) declaring a 4% stock dividend on the 30,000, $10 par value
shares outstanding, or (2) effecting a 2-for-1 stock split that will reduce par value to $5 per share. The current market price is $16 per
share.
Prepare a tabular summary of the effects of the alternative actions on the components of stockholders' equity, outstanding shares, and
par value per share.
Stockholders' equity
Paid-in capital
Common stock
In excess of par
Total paid-in capital
Retained earnings
Total stockholders' equity
Outstanding shares
Par value per share
LA
GA
$
$
LA
Before
Action
GA
GA
$
GA
$
After
Stock
Dividend
LA
LA
$
LA
$
After
Stock
Split
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Transcribed Image Text:On October 31, the stockholders' equity section of Wildhorse Company consists of common stock $300,000 and retained earnings $890,000. Wildhorse is considering the following two courses of action: (1) declaring a 4% stock dividend on the 30,000, $10 par value shares outstanding, or (2) effecting a 2-for-1 stock split that will reduce par value to $5 per share. The current market price is $16 per share. Prepare a tabular summary of the effects of the alternative actions on the components of stockholders' equity, outstanding shares, and par value per share. Stockholders' equity Paid-in capital Common stock In excess of par Total paid-in capital Retained earnings Total stockholders' equity Outstanding shares Par value per share LA GA $ $ LA Before Action GA GA $ GA $ After Stock Dividend LA LA $ LA $ After Stock Split
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