Campbell Company wants to increase the number of shares of its common stock outs

Question

Campbell Company wants to increase the number of shares of its common stock outstanding and is considering a stock dividend versus a stock split. The Stockholders' Equity section of the firm's most recent balance sheet appeared as follows: Common stock, $10 par, 51,000 shares issued and outstanding Additional paid-in capital Retained earnings $510,000 918,000 750,400 $2,178,400 Total stockholders' equity If a stock dividend is chosen, the firm wants to declare a 100% stock dividend. Because the stock dividend qualifies as a large stock dividend," it must be recorded at par value. If a stock split is chosen, Campbell will declare a 2-for-1 split Required: 1. Compare the effects of the stock dividends and stock splits on the accounting equation. If an amount is zero, enter Item Stock dividend Net impact on each category Stock splt Net impact on each category Assets Liabilities No effect No effect v No effect No effect No effect No effect 2. a. Develop the Stockholders' Equity category of Campbell's balance sheet after the stock dividend Campbell Company Partial Balance Sheet Stock Dividend Common stock, $10 par, 102000 shares issued and Additional paid-in capital-common stock Retalined $10,00 X 918,890 Total stockholders equity Check My Work signment Score: 73.33% All work saved. Save andExt Submit 2. b. Develop the Stockholders Equity category of Campbell's balance sheet after the stock split Campbell Company Partial Balance Sheet After the Stock Split Common stock, $5 par, 102000 shares issued and outstanding Retained earnings Total stockholders equity

Explanation / Answer

Answer = 2(A) Shareholder's Equity Partial Balance sheet (After the stock dividend) Common stock, $ 10 Par 102000 shares issued and outstanding $       10,20,000 Addittional Paid in Capital - Common stock $          9,18,000 Retained Earning ($ 750,400 - $ 510,000) $          2,40,400 Total Stockholder's Equity $       21,78,400 Answer = 2(A) Shareholder's Equity Partial Balance sheet (After the stock Split) Common stock, $ 5 Par 102000 shares issued and outstanding $          5,10,000 Addittional Paid in Capital - Common stock $          9,18,000 Retained Earning $          7,50,400 Total Stockholder's Equity $       21,78,400 Note: In stock dividend the overall share capital will increase for the shareholders so addittion in share capital will transfer from the balance in retaiend earning Note: In Stock Split only par value of the common shareholders will change and the rest of the other will remain the same

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