Sandhill Co. has had 4 years of record earnings. Due to thissuccess, the market...

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Accounting

Sandhill Co. has had 4 years of record earnings. Due to thissuccess, the market price of its 455,000 shares of $4 par valuecommon stock has increased from $14 per share to $54. During thisperiod, paid-in capital remained the same at $5,460,000. Retainedearnings increased from $4,095,000 to $27,300,000. CEO Don Ames isconsidering either (1) a 15% stock dividend or (2) a 2-for-1 stocksplit. He asks you to show the before-and-after effects of eachoption on (a) retained earnings, (b) total stockholders’ equity,and (c) par value per share.
(a)
1. Stock dividend - retained earnings $
2. 2-for-1 stock split - retained earnings $

(b)
Sandhill Co.
Original Balance
After Dividend
After Split
Paid-in capital
$
$
Retained earnings
Total stockholder’s equity
$ $ $
Shares outstanding

(c)
1. Stock dividend - par value per share $
2. 2-for-1 stock split - par value per share $

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In: AccountingSandhill Co. has had 4 years of record earnings. Due to thissuccess, the market price...Sandhill Co. has had 4 years of record earnings. Due to thissuccess, the market price of its 455,000 shares of $4 par valuecommon stock has increased from $14 per share to $54. During thisperiod, paid-in capital remained the same at $5,460,000. Retainedearnings increased from $4,095,000 to $27,300,000. CEO Don Ames isconsidering either (1) a 15% stock dividend or (2) a 2-for-1 stocksplit. He asks you to show the before-and-after effects of eachoption on (a) retained earnings, (b) total stockholders’ equity,and (c) par value per share.(a)1.Stock dividend - retained earnings$2.2-for-1 stock split - retained earnings$(b)Sandhill Co.Original BalanceAfter DividendAfter SplitPaid-in capital$$Retained earningsTotal stockholder’s equity$$$Shares outstanding (c)1.Stock dividend - par value per share$2.2-for-1 stock split - par value per share$

1.		Stock dividend - retained earnings		$
2.		2-for-1 stock split - retained earnings		$

Sandhill Co.
	Original Balance	After Dividend	After Split
Paid-in capital	$	$
Retained earnings
Total stockholder’s equity	$	$	$
Shares outstanding

1.		Stock dividend - par value per share		$
2.		2-for-1 stock split - par value per share		$