On October 31, the stockholders' equity section of Wildhorse Company consists of common stoc $890,000. Wildhorse is considering the following two courses of action: (1) declaring a 4% stock dividend on the 30,000, $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 $16 per share Prepare a tabular summary of the effects of the alternative actions on the components of stockholders' equity, outstanding shares, and par value per share. Stockholders' equity Paid-in capital Common stock In excess of par Total paid in capital Retained earnings Total stockholders equity Before Action After Stock Dividend After Stock Split 4
On October 31, the stockholders' equity section of Wildhorse Company consists of common stoc $890,000. Wildhorse is considering the following two courses of action: (1) declaring a 4% stock dividend on the 30,000, $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 $16 per share Prepare a tabular summary of the effects of the alternative actions on the components of stockholders' equity, outstanding shares, and par value per share. Stockholders' equity Paid-in capital Common stock In excess of par Total paid in capital Retained earnings Total stockholders equity Before Action After Stock Dividend After Stock Split 4
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:On October 31, the stockholders' equity section of Wildhorse Company consists of common stock $300,000 and retained earnings
$890,000. Wildhorse is considering the following two courses of action: (1) declaring a 4% stock dividend on the 30,000, $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 $16 per
share.
Prepare a tabular summary of the effects of the alternative actions on the components of stockholders' equity, outstanding shares, and
par value per share.
Stockholders' equity
Paid-in capital
Common stock
In excess of par
Total paid-in capital
Retained earnings
Total stockholders
equity
Outstanding shares
Par value per share
Before
Action
After
Stock
Dividend
After
Stock
Split
4
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