Stock Dividends: It refers to the payment of dividends by a company to its existing shareholders, in the form of additional shares rather than cash. Stock dividends are paid, when there is inadequate cash available in the company. Stock Splits: It is a method of increasing the total number of outstanding shares thereby, reducing the market price of each share, however, keeping the corporation’s total market value constant. To prepare: a tabular summary of the before and after effects of stock dividend issue and stock split on stockholders’ equity and outstanding shares for Company M.

Question

Cariveh Co sells automotive supplies from 25 different locations in one country. Each branch has up to 30 staff working there, although most of the accounting systems are designed and implemented from the company's head office. All accounting systems, apart from petty cash, are computerised, with the internal audit department frequently advising and implementing controls within those systems.Cariveh has an internal audit department of six staff, all of whom have been employed at Cariveh for a minimum of five years and some for as long as 15 years. In the past, the chief internal auditor appoints staff within the internal audit department, although the chief executive officer (CEO) is responsible for appointing the chief internal auditor.The chief internal auditor reports directly to the finance director. The finance director also assists the chief internal auditor in deciding on the scope of work of the internal audit department.You are an audit manager in the internal audit department…

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Chapter 11, Problem 11.11E

To determine

Stock Dividends: It refers to the payment of dividends by a company to its existing shareholders, in the form of additional shares rather than cash. Stock dividends are paid, when there is inadequate cash available in the company.

Stock Splits: It is a method of increasing the total number of outstanding shares thereby, reducing the market price of each share, however, keeping the corporation’s total market value constant.

To prepare: a tabular summary of the before and after effects of stock dividend issue and stock split on stockholders’ equity and outstanding shares for Company M.

To determine

To prepare: a tabular summary of the before and after effects of stock dividend issue and stock split on outstanding shares for Company M.

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