It is not appropriate of you to assign your homework to others. To get help you should do the work as well as you can and provide your solution so someone can help you by pointing out where you are wrong and by explaining areas where you show weaknesses.
A dividend reduces retained earnings by the market value of the shares issued. Stock is recorded at par and any additional amount goes into Addt'l paid in capital. I assume you can calculate 6% of 93,600.
A stock split is not a transaction that is journalized. It simply means more shares were issued and the par value is cut in half.
On October 31, the stockholders’ equity section of Pele Company’s balance sheet consists of common stock $748,800 and retained earnings $417,600.
Pele is considering the following two courses of action:
(1) Declaring a 6% stock dividend on the 93,600 $8 par value shares outstanding
(2) Effecting a 2-for-1 stock split that will reduce par value to $4 per share.
The current market price is $17 per share.
Prepare a tabular summary of the effects of the alternative actions on the company’s stockholders’ equity and outstanding shares.
Before Action After Stock Dividend After Stock Split
Stockholders’ equity
Paid-in capital
$
$
$
Retained earnings
$
$
$
Total stockholders’ equity
$
$
$
Outstanding shares
