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

Question

On July 1, Davidson Corporation had the following capital structure: Common stock ($3 par value) Additional paid-in capital Retained earnings Treasury stock $ 666,000 1,080,000 870,000 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 50 percent stock dividend when the stock was selling at $5 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 $5 per share Before Dividend After Stock After Stock Items and Split Dividend Split Common stock account Par value per share Shares outstanding Additional paid-in capital Retained earnings Total stockholders' equity 3.00 1,080,000 870,000

Explanation / Answer

Items Before dividend and split after stock dividend afer stock split Common stock account $                     666,000 $                          999,000 $                          666,000 par value per share $                            3.00 $                                 3.00 $                                 2.50 shares outstanding 222000 333000 266400 additional paid in capital $                 1,080,000 $                       1,080,000 $                      1,080,000 retained earnings $                     870,000 $                          537,000 $                          870,000 Total stockholder's equity $                 2,616,000 $                   2,616,000.0 $                      2,616,000

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