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 ($1 par value) Additional paid-in capital Retained earnings Treasury stock S 600,000 900,000 700,000 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 $12 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 $12 per share Before Dividend and Split After Stock Dividend After Stock Split Items Common stock account Par value per share Shares outstanding Additional paid-in capital Retained earnings Total stockholders' equity 1.00 900,000 700,000

Explanation / Answer

Before dividend and split After stock dividend After stock split Common stock account 600000 900000 600000 Par value per share 1 1 0.83 Shares outstanding 600000 900000 720000 Additional paid in capital 900000 900000 900000 Retained earnings 700000 400000 700000 Total stockholders' equity 2200000 2200000 2200000

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