On October 31, the stockholders' equity section of Omar Company consists of common stock $560,400 and retained earnings $439,100.
Omar is considering the following two courses of action:
(1) Declaring a 7% stock dividend on the 93,400, $6 par value shares outstanding
(2) Effecting a 2-for-1 stock split that will reduce par value to $3 per share.
The current market price is $16 per share.
Instructions
Prepare 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.