Stephen's Sportswear 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: . Complete the following table comparing the effects of a 100% stock dividend versus a 2-for-1 stock split on the stockholders' equity ccounts, 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% After 2-for-1 Before Stock Dividend Stock Split Common stock, $1 par value $ 1,200 Additional paid-in capital 39,000 Total paid-in capital 40,200 0 0 Retained earnings 21,850 Total stockholders' equity $ 62,050 $ 0 $ 0 Shares outstanding 1,200 Par value per share $ 1.00 Share price $ 90
Stephen's Sportswear 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: . Complete the following table comparing the effects of a 100% stock dividend versus a 2-for-1 stock split on the stockholders' equity ccounts, 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% After 2-for-1 Before Stock Dividend Stock Split Common stock, $1 par value $ 1,200 Additional paid-in capital 39,000 Total paid-in capital 40,200 0 0 Retained earnings 21,850 Total stockholders' equity $ 62,050 $ 0 $ 0 Shares outstanding 1,200 Par value per share $ 1.00 Share price $ 90
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Vinubhai
Transcribed Image Text:Stephen's Sportswear 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%
After 2-for-1
Before
Stock
Dividend
Stock Split
Common stock, $1 par value
Additional paid-in capital
Total paid-in capital
Retained earnings
$ 1,200
39,000
40,200
0
0
21,850
Total stockholders' equity
$ 62,050 $
0
$
0
Shares outstanding
1,200
Par value per share
Share price
SA SA
$
1.00
8
$
90
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education