6/4/2015 Exercise 11­7 Print by: LISA POLLOCK ACC/291

| June 12, 2016

Question
6/4/2015 Exercise 11­7

Print by: LISA POLLOCK

ACC/291 ­ 48777311 / Assignment: Week 4 Assignment

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*Exercise 11­7

On October 31, the stockholders’ equity section of Pele Company’s balance sheet consists of common stock $389,200 and retained earnings $425,300.

Pele is considering the following two courses of action:

(1) Declaring a 6% stock dividend on the 97,300 $4 par value shares outstanding

(2) Effecting a 2­for­1 stock split that will reduce par value to $2 per share.

The current market price is $14 per share.

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

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Pele Company’s

Balance Sheet

Stockholders’

Before Action

After Stock Dividend

After Stock Split

equity

$

$

$

Paid­in

capital

Retained

earnings

Total

$

$

$

stockholders’

equity

Outstanding

shares

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