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Problem 10-3A (Algo) Indicate effect of stock dividends and stock splits (LO10-6) Bob's Golf Emporium has been very profitable in recent years and has seen its stock price steadily increase to over $100 per share. The CFO thinks the company should consider either a 100% stock dividend or a 2-for-1 stock split. Required: 1. Complete the following table comparing the effects of a 100% stock dividend versus a 2-for-1 stock split on the stockholders' equity accounts, shares outstanding, par value, and share price. 2. State whether the statement "The primary reason companies declare a large stock dividend or a stock split is to lower the trading price of the stock to a more acceptable trading range, making it attractive to a larger number of potential Investors." Is true or false. Complete this question by entering your answers in the tabs below.

Problem 10-3A (Algo) Indicate effect of stock dividends and stock splits (LO10-6) Bob's Golf Emporium has been very profitable in recent years and has seen its stock price steadily increase to over $100 per share. The CFO thinks the company should consider either a 100% stock dividend or a 2-for-1 stock split. Required: 1. Complete the following table comparing the effects of a 100% stock dividend versus a 2-for-1 stock split on the stockholders' equity accounts, shares outstanding, par value, and share price. 2. State whether the statement "The primary reason companies declare a large stock dividend or a stock split is to lower the trading price of the stock to a more acceptable trading range, making it attractive to a larger number of potential Investors." Is true or false. Complete this question by entering your answers in the tabs below.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Problem 10-3A (Algo) Indicate effect of stock dividends and stock splits (LO10-6) Bob's Golf Emporium has been very profitable in recent years and has seen its stock price steadily increase to over $100 per share. The CFO thinks the company should consider either a 100% stock dividend or a 2-for-1 stock split. Required: 1. Complete the following table comparing the effects of a 100% stock dividend versus a 2-for-1 stock split on the stockholders' equity accounts, shares outstanding, par value, and share price. 2. State whether the statement "The primary reason companies declare a large stock dividend or a stock split is to lower the trading price of the stock to a more acceptable trading range, making it attractive to a larger number of potential investors." Is true or false. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Complete the following table comparing the effects of a 100% stock dividend versus a 2-for-1 stock split on the stockholders' equity accounts, shares outstanding, par value, and share price. (Round "Par value per share" to 2 decimal places.) After 100% Before Stock Dividend After 2-for-1 Stock Split Common stock, $1 par value $ 1,100 Additional paid-in capital 43,000 Total paid in capital 44,100 0 0 Retained earnings 22,250 Total stockholders' equity $ 66,350 $ 0 $ 0
Transcribed Image Text:Problem 10-3A (Algo) Indicate effect of stock dividends and stock splits (LO10-6) Bob's Golf Emporium has been very profitable in recent years and has seen its stock price steadily increase to over $100 per share. The CFO thinks the company should consider either a 100% stock dividend or a 2-for-1 stock split. Required: 1. Complete the following table comparing the effects of a 100% stock dividend versus a 2-for-1 stock split on the stockholders' equity accounts, shares outstanding, par value, and share price. 2. State whether the statement "The primary reason companies declare a large stock dividend or a stock split is to lower the trading price of the stock to a more acceptable trading range, making it attractive to a larger number of potential investors." Is true or false. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Complete the following table comparing the effects of a 100% stock dividend versus a 2-for-1 stock split on the stockholders' equity accounts, shares outstanding, par value, and share price. (Round "Par value per share" to 2 decimal places.) After 100% Before Stock Dividend After 2-for-1 Stock Split Common stock, $1 par value $ 1,100 Additional paid-in capital 43,000 Total paid in capital 44,100 0 0 Retained earnings 22,250 Total stockholders' equity $ 66,350 $ 0 $ 0
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