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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.


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


Cullumber Company

Original Balance After Dividend After Split

Paid-in capital $ $ $

Retained earnings $ $ $

Total stockholders' $ $ $


Shares outstanding $ $ $


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