On October 31, the stockholders' equity section of Manolo Company's balance sheet consists of common stock $648,000 and retained earnings $400,000. Manolo is considering the following two courses of action: (1) declaring a 5% stock dividend on the 81,000 $8 par value shares outstanding or (2) effecting a 2-for-1 stock split that will reduce par value to $4 per share. The current market price is $17 per share. Instructions Prepare a tabular summary of the effects of the alternative actions on the company's stockholders' equity and outstanding shares. Use these column headings: Before Action, After Stock Dividend, and After Stock Split.
On October 31, the stockholders' equity section of Manolo Company's balance sheet consists of common stock $648,000 and retained earnings $400,000. Manolo is considering the following two courses of action: (1) declaring a 5% stock dividend on the 81,000 $8 par value shares outstanding or (2) effecting a 2-for-1 stock split that will reduce par value to $4 per share. The current market price is $17 per share. Instructions Prepare a tabular summary of the effects of the alternative actions on the company's stockholders' equity and outstanding shares. Use these column headings: Before Action, After Stock Dividend, and After Stock Split.
Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Chapter7: Financial Activities
Section: Chapter Questions
Problem 3QE: Following is the shareholders equity section of All-Wood Doors on a day a. Use the financial...
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Question
![E11.15 (LO 3), AP
On October 31, the stockholders' equity section of Manolo Company's balance sheet consists of common stock $648,000 and retained
earnings $400,000. Manolo is considering the following two courses of action: (1) declaring a 5% stock dividend on the 81,000 $8 par
value shares outstanding or (2) effecting a 2-for-1 stock split that will reduce par value to $4 per share. The current market price is $17
per share.
Instructions
Prepare a tabular summary of the effects of the alternative actions on the company's stockholders' equity and outstanding shares. Use
these column headings: Before Action, After Stock Dividend, and After Stock Split.
Before Action
After Stock Dividend
After Stock Split
Stockholder's Equity
D
Common Stock
1 Retained Earnings
2 Total Stockholder's Equity
B
Outstanding Shares
5
Par Value
5
7
$
648,000.00
400,000.00
1,048,000.00
81,000
8.00](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fcdccc05c-d411-4be3-87c1-38b5cde54476%2F5e6398a7-d601-4419-9f96-5448dcde6016%2F43p0ii8_processed.png&w=3840&q=75)
Transcribed Image Text:E11.15 (LO 3), AP
On October 31, the stockholders' equity section of Manolo Company's balance sheet consists of common stock $648,000 and retained
earnings $400,000. Manolo is considering the following two courses of action: (1) declaring a 5% stock dividend on the 81,000 $8 par
value shares outstanding or (2) effecting a 2-for-1 stock split that will reduce par value to $4 per share. The current market price is $17
per share.
Instructions
Prepare a tabular summary of the effects of the alternative actions on the company's stockholders' equity and outstanding shares. Use
these column headings: Before Action, After Stock Dividend, and After Stock Split.
Before Action
After Stock Dividend
After Stock Split
Stockholder's Equity
D
Common Stock
1 Retained Earnings
2 Total Stockholder's Equity
B
Outstanding Shares
5
Par Value
5
7
$
648,000.00
400,000.00
1,048,000.00
81,000
8.00
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