Problem: In the first column is the equity section of Pazini Co. Consider each of the following to be independent.
a. In the second column show how the equity section would change if the company paid a 10% stock dividend when the market value of the stock was $20 per share.
b. Ignore “a” above. In the third column show how the equity section would appear if the company issued a 4 for 1 stock split.
After
Before Stk. Div. Split
Common stock, $1 par, 300,000 shares outstanding 300,000
Paid-in capital in excess of par 800,000
Retained earnings 900,000
Total equity 2,000,000