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The common shares of Hoover Inc. are currently selling at $143 per share. The directors want to reduce the share price and increase the share volume before making a new issue. The per- share carrying value is $34. There are currently 1 million shares issued and outstanding. Instructions a. Prepare the necessary journal entries assuming that: 1. The board votes for a 2-for-1 stock split. 2. The board votes for a 100% stock dividend at the fair value of the shares. b. Briefly discuss the accounting and securities market differences between these two methods of

The common shares of Hoover Inc. are currently selling at $143 per share. The directors want to reduce the share price and increase the share volume before making a new issue. The per- share carrying value is $34. There are currently 1 million shares issued and outstanding. Instructions a. Prepare the necessary journal entries assuming that: 1. The board votes for a 2-for-1 stock split. 2. The board votes for a 100% stock dividend at the fair value of the shares. b. Briefly discuss the accounting and securities market differences between these two methods of

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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The common shares of Hoover Inc. are currently selling at $143 per share. The directors want to reduce the share price and increase the share volume before making a new issue. The per- share carrying value is $34. There are currently 1 million shares issued and outstanding. Instructions a. Prepare the necessary journal entries assuming that: 1. The board votes for a 2-for-1 stock split. 2. The board votes for a 100% stock dividend at the fair value of the shares. b. Briefly discuss the accounting and securities market differences between these two methods of increasing the number of shares outstanding.
Transcribed Image Text:The common shares of Hoover Inc. are currently selling at $143 per share. The directors want to reduce the share price and increase the share volume before making a new issue. The per- share carrying value is $34. There are currently 1 million shares issued and outstanding. Instructions a. Prepare the necessary journal entries assuming that: 1. The board votes for a 2-for-1 stock split. 2. The board votes for a 100% stock dividend at the fair value of the shares. b. Briefly discuss the accounting and securities market differences between these two methods of increasing the number of shares outstanding.
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