The common stock of Alexander Hamilton Inc. is currently selling at $120 per share. The directors wish to reduce the share price and increase share volume prior to a new issue. The per share par value is $10; book value is $70 per share. Nine million shares are issued and outstanding. Instructions Prepare the necessary journal entries assuming the following. a. The board votes a 2-for-1 stock split. b. The board votes a 100% stock dividend. c. Briefly discuss the accounting and securities market differences between these two methods of increasing the number of shares outstanding.
The common stock of Alexander Hamilton Inc. is currently selling at $120 per share. The directors wish to reduce the share price and increase share volume prior to a new issue. The per share par value is $10; book value is $70 per share. Nine million shares are issued and outstanding. Instructions Prepare the necessary journal entries assuming the following. a. The board votes a 2-for-1 stock split. b. The board votes a 100% stock dividend. c. Briefly discuss the accounting and securities market differences between these two methods of increasing the number of shares outstanding.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
The common stock of Alexander Hamilton Inc. is currently selling at $120 per share. The directors wish to reduce the share price and increase share volume prior to a new issue. The per share par value is $10; book value is $70 per share. Nine million shares are issued and outstanding.
Instructions
Prepare the necessary
a. The board votes a 2-for-1 stock split.
b. The board votes a 100% stock dividend.
c. Briefly discuss the accounting and securities market differences between these two methods of increasing the number of shares outstanding.
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