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Stephen's Sportswear has been very profitable in recent years and has seen its stock price steadily increase to over $100 per share. The CFO thinks the company should consider either a 100% stock dividend or a 2-for-1 stock split. Required: . Complete the following table comparing the effects of a 100% stock dividend versus a 2-for-1 stock split on the stockholders' equity ccounts, shares outstanding, par value, and share price. 2. State whether the statement "The primary reason companies declare a large stock dividend or a stock split is to lower the trading price of the stock to a more acceptable trading range, making it attractive to a larger number of potential investors." is true or false. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Complete the following table comparing the effects of a 100% stock dividend versus a 2-for-1 stock split on the stockholders' equity accounts, shares outstanding, par value, and share price. (Round "Par value per share" to 2 decimal places.) After 100% After 2-for-1 Before Stock Dividend Stock Split Common stock, $1 par value $ 1,200 Additional paid-in capital 39,000 Total paid-in capital 40,200 0 0 Retained earnings 21,850 Total stockholders' equity $ 62,050 $ 0 $ 0 Shares outstanding 1,200 Par value per share $ 1.00 Share price $ 90

Stephen's Sportswear has been very profitable in recent years and has seen its stock price steadily increase to over $100 per share. The CFO thinks the company should consider either a 100% stock dividend or a 2-for-1 stock split. Required: . Complete the following table comparing the effects of a 100% stock dividend versus a 2-for-1 stock split on the stockholders' equity ccounts, shares outstanding, par value, and share price. 2. State whether the statement "The primary reason companies declare a large stock dividend or a stock split is to lower the trading price of the stock to a more acceptable trading range, making it attractive to a larger number of potential investors." is true or false. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Complete the following table comparing the effects of a 100% stock dividend versus a 2-for-1 stock split on the stockholders' equity accounts, shares outstanding, par value, and share price. (Round "Par value per share" to 2 decimal places.) After 100% After 2-for-1 Before Stock Dividend Stock Split Common stock, $1 par value $ 1,200 Additional paid-in capital 39,000 Total paid-in capital 40,200 0 0 Retained earnings 21,850 Total stockholders' equity $ 62,050 $ 0 $ 0 Shares outstanding 1,200 Par value per share $ 1.00 Share price $ 90

Managerial Accounting: The Cornerstone of Business Decision-Making
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter15: Financial Statement Analysis
Section: Chapter Questions
Problem 66P
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Stephen's Sportswear has been very profitable in recent years and has seen its stock price steadily increase to over $100 per share. The CFO thinks the company should consider either a 100% stock dividend or a 2-for-1 stock split. Required: 1. Complete the following table comparing the effects of a 100% stock dividend versus a 2-for-1 stock split on the stockholders' equity accounts, shares outstanding, par value, and share price. 2. State whether the statement "The primary reason companies declare a large stock dividend or a stock split is to lower the trading price of the stock to a more acceptable trading range, making it attractive to a larger number of potential investors." is true or false. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Complete the following table comparing the effects of a 100% stock dividend versus a 2-for-1 stock split on the stockholders' equity accounts, shares outstanding, par value, and share price. (Round "Par value per share" to 2 decimal places.) After 100% After 2-for-1 Before Stock Dividend Stock Split Common stock, $1 par value Additional paid-in capital Total paid-in capital Retained earnings $ 1,200 39,000 40,200 0 0 21,850 Total stockholders' equity $ 62,050 $ 0 $ 0 Shares outstanding 1,200 Par value per share Share price SA SA $ 1.00 8 $ 90
Transcribed Image Text:Stephen's Sportswear has been very profitable in recent years and has seen its stock price steadily increase to over $100 per share. The CFO thinks the company should consider either a 100% stock dividend or a 2-for-1 stock split. Required: 1. Complete the following table comparing the effects of a 100% stock dividend versus a 2-for-1 stock split on the stockholders' equity accounts, shares outstanding, par value, and share price. 2. State whether the statement "The primary reason companies declare a large stock dividend or a stock split is to lower the trading price of the stock to a more acceptable trading range, making it attractive to a larger number of potential investors." is true or false. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Complete the following table comparing the effects of a 100% stock dividend versus a 2-for-1 stock split on the stockholders' equity accounts, shares outstanding, par value, and share price. (Round "Par value per share" to 2 decimal places.) After 100% After 2-for-1 Before Stock Dividend Stock Split Common stock, $1 par value Additional paid-in capital Total paid-in capital Retained earnings $ 1,200 39,000 40,200 0 0 21,850 Total stockholders' equity $ 62,050 $ 0 $ 0 Shares outstanding 1,200 Par value per share Share price SA SA $ 1.00 8 $ 90
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