Reference no: EM131211404

Stock Dividends versus Stock Splits Campbell Company wants to increase the number of shares of its common stock outstanding and is considering a stock dividend versus a stock split. The Stockholders' Equity section of the firm's most recent balance sheet appeared as follows: Common stock, $10 par, 58,900 shares issued and outstanding $589,000 Additional paid-in capital 706,800 Retained earnings 843,700 Total Stockholders' Equity $2,139,500 If a stock dividend is chosen, the firm wants to declare a 100% stock dividend. Because the stock dividend qualifies as a "large stock dividend," it must be recorded at par value. If a stock split is chosen, Campbell will declare a 2-for-1 split. Required: 1. Compare the effects of the stock dividends and stock splits on the accounting equation. If an amount is zero, enter "0". Item Assets Liabilities Stockholders' equity Stock dividend Net impact on each category $ $ $ Stock split Net impact on each category $ $ $ Hide 2. a. Develop the Stockholders' Equity category of Campbell's balance sheet after the stock dividend. Campbell Company Partial Balance Sheet After the Stock Dividend Stockholder's Equity $ Total stockholders' equity $ Hide 2. b. Develop the Stockholders' Equity category of Campbell's balance sheet after the stock split. Campbell Company Partial Balance Sheet After the Stock Split Stockholders' Equity $ Total stockholders' equity $