View the step-by-step solution to:

Question

Cullumber Company had 4 years of record earnings. Due to this success, the market price of its 460,000 shares of

$2 par value common stock has increased from $13 per share to $53. During this period, paid-in capital remained the same at $2,760,000. Retained earnings increased from $2,070,000 to $13,800,000. CEO Don Ames is considering either (1) a 15% stock dividend or (2) a 2-for-1 stock split. He asks you to show the before-and-after effects of each option on (a) retained earnings, (b) total stockholders' equity, and (c) par value per share.


(a)


  1. Stock dividend - retained earnings $
  2. 2-for-1 stock split - retained earnings $


(b)


Cullumber Company


Original Balance After Dividend After Split


Paid-in capital $ $ $


Retained earnings $ $ $


Total stockholders' $ $ $

equity


Shares outstanding $ $ $


(c)


Top Answer

View the full answer
Attachment.PNG

Sign up to view the full answer

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.

-

Educational Resources
  • -

    Study Documents

    Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

    Browse Documents
  • -

    Question & Answers

    Get one-on-one homework help from our expert tutors—available online 24/7. Ask your own questions or browse existing Q&A threads. Satisfaction guaranteed!

    Ask a Question
Ask a homework question - tutors are online