E11-14 Comparing 100 Percent Stock Dividend and 2-for-1 Split [LO 11-3] On July
ID: 2526969 • Letter: E
Question
E11-14 Comparing 100 Percent Stock Dividend and 2-for-1 Split [LO 11-3] On July 1, Jones Corporation had the following capital structure: Common Stock, par $1; 8,000,000 authorized shares, 175,000 issued and outstanding Additional Paid-in Capital Retained Earnings Treasury Stock $175,000 105,000 185,000 None Required: Complete the following table based on two independent cases involving stock transactions: (Round "per share" answers to 2 decimal places.) Case 1: The board of directors declared and issued a 100 percent stock dividend when the stock price was $6 per share. Case 2: The board of directors voted a 2-for-1 stock split. The stock price prior to the split was $6 per share. Case 1 Case 2 After 100% | After Stock Items Stock Transactions Dividend Number of Shares Outstanding Par Per Share Common Stock Account Additional Paid-in Capital Retained Earnings Total Stockholders' Equity 1.00 105,000 185,000Explanation / Answer
Before stock transactions
After 100% stock dividend
After stock split
Number of Shares outstanding
1,75,000
3,50,000
$3,50,000
Par per share
$1
$1
$0.50
Common stock Account
$1,75,000
$3,50,000
$1,75,000
Additional paid-in capital
$1,05,000
$1,05,000
$1,05,000
Retained earnings
$1,85,000
$10,000
$1,85,000
Total stockholders’ equity
$4,65,000
$4,65,000
$4,65,000
After 100% stock dividend
Number of Shares outstanding = 175000 + (175000*100%) = 375000
Retained earnings = $185000 - $175000 = $10000
After stock split
Number of Shares outstanding = 175000 + (175000 x2/1) = 350000
Par per share = $175000 / 350000 = $0.50
Before stock transactions
After 100% stock dividend
After stock split
Number of Shares outstanding
1,75,000
3,50,000
$3,50,000
Par per share
$1
$1
$0.50
Common stock Account
$1,75,000
$3,50,000
$1,75,000
Additional paid-in capital
$1,05,000
$1,05,000
$1,05,000
Retained earnings
$1,85,000
$10,000
$1,85,000
Total stockholders’ equity
$4,65,000
$4,65,000
$4,65,000
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