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Stock Dividend v. Stock Split (12 points)

Sapporo Company has had 4 years of record earnings. The market price of its 400,000 shares outstanding is $50 per share. The stock has a par value of $2 per share (dont break out common stock and additional paid in capital, combine both in Paid-in Capital). Paid-in capital is $2,400,000. Retained earnings is $12,000,000 for the current year. CEO Henrik Lundqvist 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 and (b) total stockholders equity (c) # of shares outstanding, and (d) par value per share. Fill in the table below (make your own to show the amounts in each category under each scenario).

Question 24 12 pts Stock Dividend v. Stock Split (12 points) Sapporo Company has had 4 years of record earnings. The market price of its 400,000 shares outstanding is $50 per share. The stock has a par value of $2 per share (don't break out common stock" and "additional paid in capital," combine both in Paid-in Capital). Paid-in capital is $2,400,000. Retained earnings is $12,000,000 for the current year. CEO Henrik Lundqvist 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 and (b) total stockholders' equity (c) # of shares outstanding, and (d) par value per share. Fill in the table below (make your own to show the amounts in each category under each scenario). Original Balance After 15% Stock Dividend After 2-for-1 Stock Split Paid-in Capital Retained earnings Total Stockholders' Equity # Shares Outstanding Par value per share

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