On October 31, the stockholders’ equity section of Oriole Company’s balance sheet consists of common stock $833,000 and retained earnings $901,000. Oriole is considering the following two courses of action: (1) declaring a 6% stock dividend on the 83,300 $10 par value shares outstanding or (2) effecting a 2-for-1 stock split that will reduce par value to $5 per share. The current market price is $15 per share. Prepare a tabular summary of the effects of the alternative actions on the company’s stockholders’ equity and outstanding shares.

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Q: Dineshbhai

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Stockholder's Equity

The stockholders’ equity (often referred to as the book value of the company) is the number of assets available to the stockholder after its entire liabilities is paid off. The stockholders’ equity is also sometimes referred to as owner's equity. The stockholders’ equity or book value generally includes common stock, treasury stock retained earnings. It is an indicator of a company's financial strength and is an important item on the company's balance sheet.