acc_291_week_4_individual_assignment

Apr 17th, 2015
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Individual Assignment Week 4Accounting 291E11-15 On October 31, the stockholder's equity section of Omar Company consists of common stock $600,000 and retained earnings $900,000. Omar is considering the following two courses of action: (1) declaring a 5% stock dividend on the 60,000, $10 par value shares outstanding, or (2) effecting a 2-for-1 stock split that will reduce par value to $5 per share. The current market price is $14 per share.InstructionsPrepare a tabular summary of the effects of the alternative actions on the components of stockholders equity and outstanding shares. Use the following column headings: Before Action, After Stock Dividend, and After Stock Split.Solution: Before Action After Stock Dividend After Stock Split Stockholders' equityPaid-in capitalCommon stock 600,000 630,000 600,000 In excess of par value - 12,000 - Total paid-in capital 600,000 642,000 600,000 Retained earnings 900,000 858,000 900,000 Total stockholders' equity $

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