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

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Accounting

Sandhill Co. has had 4 years of record earnings. Due to this success, the market price of its 455,000 shares of $4 par value common stock has increased from $14 per share to $54. During this period, paid-in capital remained the same at $5,460,000. Retained earnings increased from $4,095,000 to $27,300,000. CEO Don Ames is considering either (1) a 15% stock dividend or (2) a 2-for-1 stock split. He asks you to show the before-and-after effects of each option 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 stockholders 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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