Question: On October 31, the stockholders' equity section of Heins Company consists of common stock $280,000 and retained earnings $886,000. Heins is considering the following two courses of action:
(1) declaring a 7% stock dividend on the 28,000, $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 $16 per share.
Prepare a tabular summary of the effects of the alternative actions on the components of stockholders' equity, outstanding shares, and par value per share.