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On October 31, the stockholders' equity section of Pele Company's balance sheet consists of common stock $790,400 and retained earnings $445,100.

On October 31, the stockholders’ equity section of Pele Company’s balance sheet consists of common stock $790,400 and retained earnings $445,100.


Pele is considering the following two courses of action:


(1) Declaring a 7% stock dividend on the 98,800 $8 par value shares outstanding
(2) Effecting a 2-for-1 stock split that will reduce par value to $4 per share.


The current market price is $17 per share.


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

Top Answer

Solution Account Before After stock dividend After... View the full answer

11 comments
  • After stock dividend SE = 98800*7%*17+790400, Ost shares = 98800+98800*7%
    • akansha.malhotra3110
    • Apr 11, 2016 at 9:44pm
  • its telling me some of it wrong i have screen shot it and i cant figure out how to show you
    • bcbt86404
    • Apr 11, 2016 at 9:52pm
  • Can you tell me what is wrong, will recify it
    • akansha.malhotra3110
    • Apr 11, 2016 at 10:23pm
  • retained earnings after stock dividend total stock equity after stock dividend and outstanding shares after stock split
    • bcbt86404
    • Apr 11, 2016 at 10:27pm
  • ok
    • akansha.malhotra3110
    • Apr 11, 2016 at 10:28pm
  • Before action Before Action Paid in capital 790400 Retained Earnings 445100 Total shareholders equity 1235500 Outstanding shares 98800
    • akansha.malhotra3110
    • Apr 11, 2016 at 10:54pm
  • after stock Dividend Paid in capital 907972 Retained Earnings 327528 Total shareholders equity 1235500 Outstanding shares 105716
    • akansha.malhotra3110
    • Apr 11, 2016 at 10:55pm
  • After stock split Paid in capital 790400 Retained Earnings 445100 Total shareholders equity 1235500 Outstanding shares 197600
    • akansha.malhotra3110
    • Apr 11, 2016 at 10:55pm
  • Hope this helps
    • akansha.malhotra3110
    • Apr 11, 2016 at 10:55pm
  • thank you so much
    • bcbt86404
    • Apr 11, 2016 at 11:03pm
  • Welcome
    • akansha.malhotra3110
    • Apr 11, 2016 at 11:04pm

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