Prepare the journal entry for the stock dividend. A dividend reduces retained earnings. A split does not. You will issue 4, 250 new shares as a dividend and you have to reduce retained earnings by the market value. The journal entry will give you the numbers to calculate the change in the capital accounts.
The split requires issuing 85,000 shares and reducing the par value. There is no journal entry and no effect on retained earnings.
On October 31 the stockholders' equity section of Opio Company's balance sheet consists of common stock $680,000 and retained earnings $408,200. Opio is considering the following two courses of action: (1) declaring a 5% stock dividend on the 85,000 $12 par value shares outstanding or (2) effecting a 2-for-1 stock split that will reduce par value to $6 per share. The current market price is $17 per share. (Round answers to 0 decimal places, e.g. 20,550.)
Complete the tabular summary of the effects of the alternative actions on the company's stockholders' equity, outstanding shares.
Before Action After Stock Dividend After Stock Split
Stockholders' equity
Paid-in capital
Retained earnings
Total stockholders' equity
Outstanding shares
I figured out the paid-in capital part, I just don't understand how to get the retained earnings and total stockholders equity.
