Prepare a tabular summary of the effects of the alternative

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On October 31, the stockholders' equity section of Pele Company's balance sheet consists of common stock $519,600 and retained earnings $430,000.

Pele is considering the following two courses of action:

(1)

 

Declaring a 7% stock dividend on the 86,600 $6 par value shares outstanding

(2)

 

Effecting a 2-for-1 stock split that will reduce par value to $3 per share.

The current market price is $15 per share.

Prepare a tabular summary of the effects of the alternative actions on the company's stockholders' equity and outstanding shares.

Pele Company's
Balance Sheet

 

Before Action

After Stock Dividend

After Stock Split

Stockholders' equity

     

   Paid-in capital

$

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$

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$

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   Retained earnings

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      Total stockholders' equity

$

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$

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$

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Outstanding shares

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Reference no: EM131799962

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