On July 1, 2014, Davidson Corporation had the following capital structure: Requi

Question

On July 1, 2014, Davidson Corporation had the following capital structure: Required: Complete the following comparative tabulation based on two independent cases: (Round "Par value per share" answers to 2 decimal places.) Case 1: The board of directors declared and issued a 50 percent stock dividend when the stock was selling at $7 per share. Case 2: The board of directors voted a 6-to-5 stock split (i.e., a 20 percent increase in the number of shares). The market price prior to the split was $7 per share.

Explanation / Answer

AFTER STOCK DIVIDEND

AFTER STOCK SPLIT

ITEM BEFORE DIVIDEND & SPLIT PAR VALUE PER SHARE $5 SHARE OUTSTANDING ($624000 / $5) 124800 CAPITAL IN EXCESS OF PAR $910000 RETAINED EARNNINGS $830000 TOTAL SHARE HOLDERS EQUITY $2364000

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