Problem 10-08

A firm has the following balance sheet:

Assets				Liabilities and Equity
Cash	$	25,000		Accounts payable	$	25,000
Accounts receivable		156,000		Long-term debt		103,000
Inventory		79,000		Common stock ($7 par;		21,000
				3,000 shares outstanding)
Plant and equipment		190,000		Additional paid-in capital		155,000
				Retained earnings		146,000
		$450,000				$450,000

1. Construct a new balance sheet showing the impact of atwo-for-one split. If the current market price of the stock is $50,what is the price after the split? Round the par value and themarket price after the split to the nearest cent, the number ofshares outstanding to the nearest whole number, and the otheranswers to the nearest dollar.

   Assets				Liabilities and Equity
   Cash		$		Accounts payable		$
   Accounts receivable		$		Long-term debt		$
   Inventory		$		Common stock ($   par;		$
   				shares outstanding)
   Plant and equipment		$		Additional paid-in capital		$
   				Retained earnings		$
   		$				$

   Price of the common stock after the split: $  

2. Construct a new balance sheet showing the impact of a 10 percentstock dividend. After the stock dividend, what is the new price ofthe common stock? Use the original balance sheet from the problemstatement. Round the par value and the market price after the stockdividend to the nearest cent, the number of shares outstanding tothe nearest whole number, and the other answers to the nearestdollar.

   Assets				Liabilities and Equity
   Cash		$		Accounts payable		$
   Accounts receivable		$		Long-term debt		$
   Inventory		$		Common stock ($   par;		$
   				shares outstanding)
   Plant and equipment		$		Additional paid-in capital		$
   				Retained earnings		$
   		$				$

   Price of the common stock after the stock dividend:$