On October 31, the stockholders' equity section of Omar Company consists of common stock $600,000 and retained earnings $900,000. Omar is considering the following two courses of action: (1) declaring a 5% stock dividend on the 60,000, $10 par value shares outstanding, or (2) effecting a 2-for-1 stock split that will reduce par value to $5 per share. The current market price is $14 per share.
Complete the tabular summary of the effects of the alternative actions on the components of stockholders' equity, outstanding shares, and book value per share. (If answer is zero, please enter 0. Do not leave any fields blank. Round book value per share to 2 decimal places, e.g. 10.50.)
This file contains detailed illustrations on the effects of alternative actions (stock dividend or stock split) on the components of stockholders' equity, outstanding shares, and book value per share.