Problem 10-3A (Algo) Indicate effect of stock dividends and stock splits (LO10-6) Bob's Golf Emporium has been very profitable in recent years and has seen its stock price steadily increase to over $100 per share. The CFO thinks the company should consider either a 100% stock dividend or a 2-for-1 stock split. Required: 1. Complete the following table comparing the effects of a 100% stock dividend versus a 2-for-1 stock split on the stockholders' equity accounts, shares outstanding, par value, and share price. 2. State whether the statement "The primary reason companies declare a large stock dividend or a stock split is to lower the trading price of the stock to a more acceptable trading range, making it atractive to a larger number of potential investors." is true or false. Complete the following table comparing the effects of a 100% stock dividend versus a 2-for-1 stock split on the stockholders' equity accounts, shares outstanding, par value, and share price. (Round "Par value per share" to 2 decimal places.) Common stock, $1 par value Additional paid-in capital Total paid-in capital Retained earnings Total stockholders' equity Shares outstanding Par value per share. Share price Before $1,000 49,000 50,000 22,850 $72,850 $ $ 1,000 1.00 110 After 100% Stock Dividend After 2-for-1 Stock Split
Problem 10-3A (Algo) Indicate effect of stock dividends and stock splits (LO10-6) Bob's Golf Emporium has been very profitable in recent years and has seen its stock price steadily increase to over $100 per share. The CFO thinks the company should consider either a 100% stock dividend or a 2-for-1 stock split. Required: 1. Complete the following table comparing the effects of a 100% stock dividend versus a 2-for-1 stock split on the stockholders' equity accounts, shares outstanding, par value, and share price. 2. State whether the statement "The primary reason companies declare a large stock dividend or a stock split is to lower the trading price of the stock to a more acceptable trading range, making it atractive to a larger number of potential investors." is true or false. Complete the following table comparing the effects of a 100% stock dividend versus a 2-for-1 stock split on the stockholders' equity accounts, shares outstanding, par value, and share price. (Round "Par value per share" to 2 decimal places.) Common stock, $1 par value Additional paid-in capital Total paid-in capital Retained earnings Total stockholders' equity Shares outstanding Par value per share. Share price Before $1,000 49,000 50,000 22,850 $72,850 $ $ 1,000 1.00 110 After 100% Stock Dividend After 2-for-1 Stock Split
Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Gary A. Porter, Curtis L. Norton
Chapter11: Stockholders' Equity
Section: Chapter Questions
Problem 11.4AP
Related questions
Question
8
Transcribed Image Text:Problem 10-3A (Algo) Indicate effect of stock dividends and stock splits (LO10-6)
Bob's Golf Emporium has been very profitable in recent years and has seen its stock price steadily increase to over $100 per share.
The CFO thinks the company should consider either a 100% stock dividend or a 2-for-1 stock split.
Required:
1. Complete the following table comparing the effects of a 100% stock dividend versus a 2-for-1 stock split on the stockholders' equity
accounts, shares outstanding, par value, and share price.
2. State whether the statement "The primary reason companies declare a large stock dividend or a stock split is to lower the trading
price of the stock to a more acceptable trading range, making it atractive to a larger number of potential investors." is true or false.
Complete the following table comparing the effects of a 100% stock dividend versus a 2-for-1 stock split on the stockholders'
equity accounts, shares outstanding, par value, and share price. (Round "Par value per share" to 2 decimal places.)
Common stock, $1 par value
Additional paid-in capital
Total paid-in capital
Retained earnings
Total stockholders' equity
Shares outstanding
Par value per share
Share price
Before
$ 1,000
49,000
50,000
22,850
$ 72,850
1,000
1.00
110
$
$
After 100%
Stock
Dividend
After 2-for-1
Stock Split
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 5 steps with 2 images
Recommended textbooks for you
Financial Accounting: The Impact on Decision Make…
Accounting
ISBN:
9781305654174
Author:
Gary A. Porter, Curtis L. Norton
Publisher:
Cengage Learning
Pfin (with Mindtap, 1 Term Printed Access Card) (…
Finance
ISBN:
9780357033609
Author:
Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher:
Cengage Learning
Fundamentals Of Financial Management, Concise Edi…
Finance
ISBN:
9781337902571
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Financial Accounting: The Impact on Decision Make…
Accounting
ISBN:
9781305654174
Author:
Gary A. Porter, Curtis L. Norton
Publisher:
Cengage Learning
Pfin (with Mindtap, 1 Term Printed Access Card) (…
Finance
ISBN:
9780357033609
Author:
Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher:
Cengage Learning
Fundamentals Of Financial Management, Concise Edi…
Finance
ISBN:
9781337902571
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Fundamentals of Financial Management, Concise Edi…
Finance
ISBN:
9781285065137
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT