EXERCISE 15-13 - directors to increase the quantity of...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
EXERCISE 15-13 (a) No entry—simply a memorandum indicating the number of shares has increased to 18 million and par value has been reduced from $10 to $5 per share. (b) Retained Earnings. .......................................... 90,000,000 Common Stock Dividend Distributable. .. 90,000,000 Common Stock Dividend Distributable. ........ 90,000,000 Common Stock 90,000,000 (c) Stock dividends and splits serve the same function with regard to the securities markets. Both techniques allow the board of
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: directors to increase the quantity of shares and channel share prices into the popular trading range. For accounting purposes the 20%-25% rule reasonably views large stock dividends as substantive stock splits. It is necessary to capitalize par value with a stock dividend because the number of shares is increased and the par value remains the same. Earnings are capitalized for purely procedural reasons....
View Full Document

Ask a homework question - tutors are online