On July 1, Davidson Corporation had the following capital structure Common stock

Question

On July 1, Davidson Corporation had the following capital structure Common stock ( $4 par value) Additional paid-in capital Retained earnings Treasury stock $ 684,000 1,090,000 730,000 Required: Complete the table below for each of the two following independent cases: (Round "Par value per share" answers to 2 decimal places.) Case 1: The board of directors declared and issued a 40 percent stock dividend when the stock was selling at $6 per share Case 2: The board of directors announced a 6-for-5 stock split (i.e., a 20 percent increase in the number of shares). The market price prior to the split was $6 per share Before Dividend and Split After Stock Dividend After Stock Split $684,000 Items 684,000 Common stock account Par value per share Shares outstanding Additional paid-in capital Retained earnings Total stockholders' equity 4.00 $ 4.00$ 3.33 $ 1,090,000 $ 1,090,000$1,090,000 $730,000 2,504,000 730,000: 2,504,00of $ $ 2,504,000 $

Explanation / Answer

Before dividend and stock split After stock dividend After stock split Common stock account 684000 957600 684000 Par value per share 4 4 3.33 Shares outstanding 171000 239400 205200 Additional paid in capital 1090000 1090000 1090000 Retained earnings 730000 456400 730000 Total stockholders' equity 2504000 2504000 2504000

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