blossom company has had 4 years of record earnings. Due to this success, the mar

Question

blossom company has had 4 years of record earnings. Due to this success, the market price of its 370,000 Do I! R 11-3b eamings. Due to this success, the market price of its 370,000 shares of $2 par value common stock has increased from $15 per share to 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. 1. Stock dividend - retained earnings Total stockholder's equity s earch

Explanation / Answer

Stock- dividend retained earnings 2830500 2-for 1- stock split retained earnings 0 Blossom co. Before After After stock div stock div stock split Stockholders Equity paid in capital 2,220,000 5,050,500 2,220,000 retained earnings 11,100,000 8,269,500 11,100,000 total stockholders Equity 13,320,000 13,320,000 13320000 outstanding shares 370,000 425500 740000 stock dividend = 370,000*15% 55500 shares 55,500*51 2830500 1) Stock- dividend par value $2 2) Stock-split par value $1

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