P15.10 (LO 3) Writing (Stock Dividends and Stock Split) Oregon Inc. $10 par common ste selling for $110 per share. Four million shares are currently issued and outstanding. The board of tors wishes to stimulate interest in Oregon common stock before a forthcoming stock issue but doe wish to distribute capital at this time. The board also believes that too many adjustments to the stock ers' equity section, especially retained earnings, might discourage potential investors. The board has considered three options for stimulating interest in the stock: 1. A 20% stock dividend. 2. A 100% stock dividend. 3. A 2-for-1 stock split.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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P15.10 (LO 3) Writing (Stock Dividends and Stock Split) Oregon Inc. $10 par common stock is
selling for $110 per share. Four million shares are currently issued and outstanding. The board of direc-
tors wishes to stimulate interest in Oregon common stock before a forthcoming stock issue but does not
wish to distribute capital at this time. The board also believes that too many adjustments to the stockhold-
ers' equity section, especially retained earnings, might discourage potential investors.
The board has considered three options for stimulating interest in the stock:
1. A 20% stock dividend.
2. A 100% stock dividend.
3. A 2-for-1 stock split.
Instructions
Acting as financial advisor to the board, you have been asked to report briefly on each option and, consid-
ering the board's wishes, make a recommendation. Discuss the effects of each of the foregoing options.
Transcribed Image Text:P15.10 (LO 3) Writing (Stock Dividends and Stock Split) Oregon Inc. $10 par common stock is selling for $110 per share. Four million shares are currently issued and outstanding. The board of direc- tors wishes to stimulate interest in Oregon common stock before a forthcoming stock issue but does not wish to distribute capital at this time. The board also believes that too many adjustments to the stockhold- ers' equity section, especially retained earnings, might discourage potential investors. The board has considered three options for stimulating interest in the stock: 1. A 20% stock dividend. 2. A 100% stock dividend. 3. A 2-for-1 stock split. Instructions Acting as financial advisor to the board, you have been asked to report briefly on each option and, consid- ering the board's wishes, make a recommendation. Discuss the effects of each of the foregoing options.
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