Problem 10-3A (Algo) Indicate effect of stock dividends and stock splits (LO10-6) Bob's Golf Emporium has been very profitable in recent years and has seen its stock price steadily increase to over $100 per share. The CFO thinks the company should consider either a 100% stock dividend or a 2-for-1 stock split. Required: 1. Complete the following table comparing the effects of a 100% stock dividend versus a 2-for-1 stock split on the stockholders' equity accounts, shares outstanding, par value, and share price. 2. State whether the statement "The primary reason companies declare a large stock dividend or a stock split is to lower the trading price of the stock to a more acceptable trading range, making it atractive to a larger number of potential investors." is true or false. Complete the following table comparing the effects of a 100% stock dividend versus a 2-for-1 stock split on the stockholders' equity accounts, shares outstanding, par value, and share price. (Round "Par value per share" to 2 decimal places.) Common stock, $1 par value Additional paid-in capital Total paid-in capital Retained earnings Total stockholders' equity Shares outstanding Par value per share. Share price Before $1,000 49,000 50,000 22,850 $72,850 $ $ 1,000 1.00 110 After 100% Stock Dividend After 2-for-1 Stock Split
Problem 10-3A (Algo) Indicate effect of stock dividends and stock splits (LO10-6) Bob's Golf Emporium has been very profitable in recent years and has seen its stock price steadily increase to over $100 per share. The CFO thinks the company should consider either a 100% stock dividend or a 2-for-1 stock split. Required: 1. Complete the following table comparing the effects of a 100% stock dividend versus a 2-for-1 stock split on the stockholders' equity accounts, shares outstanding, par value, and share price. 2. State whether the statement "The primary reason companies declare a large stock dividend or a stock split is to lower the trading price of the stock to a more acceptable trading range, making it atractive to a larger number of potential investors." is true or false. Complete the following table comparing the effects of a 100% stock dividend versus a 2-for-1 stock split on the stockholders' equity accounts, shares outstanding, par value, and share price. (Round "Par value per share" to 2 decimal places.) Common stock, $1 par value Additional paid-in capital Total paid-in capital Retained earnings Total stockholders' equity Shares outstanding Par value per share. Share price Before $1,000 49,000 50,000 22,850 $72,850 $ $ 1,000 1.00 110 After 100% Stock Dividend After 2-for-1 Stock Split
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Problem 10-3A (Algo) Indicate effect of stock dividends and stock splits (LO10-6)
Bob's Golf Emporium has been very profitable in recent years and has seen its stock price steadily increase to over $100 per share.
The CFO thinks the company should consider either a 100% stock dividend or a 2-for-1 stock split.
Required:
1. Complete the following table comparing the effects of a 100% stock dividend versus a 2-for-1 stock split on the stockholders' equity
accounts, shares outstanding, par value, and share price.
2. State whether the statement "The primary reason companies declare a large stock dividend or a stock split is to lower the trading
price of the stock to a more acceptable trading range, making it atractive to a larger number of potential investors." is true or false.
Complete the following table comparing the effects of a 100% stock dividend versus a 2-for-1 stock split on the stockholders'
equity accounts, shares outstanding, par value, and share price. (Round "Par value per share" to 2 decimal places.)
Common stock, $1 par value
Additional paid-in capital
Total paid-in capital
Retained earnings
Total stockholders' equity
Shares outstanding
Par value per share
Share price
Before
$ 1,000
49,000
50,000
22,850
$ 72,850
1,000
1.00
110
$
$
After 100%
Stock
Dividend
After 2-for-1
Stock Split
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