Explore BrainMass
Share

Impact on Stockholder's Equity

This content was STOLEN from BrainMass.com - View the original, and get the solution, here!

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.

Instructions
Prepare a tabular summary of the effects of the alternative actions on the components of stockholders' equity, outstanding shares, and book value per share. Use the following column headings: Before Action, After Stock Dividend, and After Stock Split.

© BrainMass Inc. brainmass.com September 19, 2018, 6:32 pm ad1c9bdddf - https://brainmass.com/business/issuing-equity/impact-on-stockholder-s-equity-189851

Solution Summary

The impact on stockholder's equity for Omar Company is considered.

$2.19