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. Roforo After Stock After Stock
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. Roforo After Stock After Stock
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Subject: acounting
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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