Before Action
Action After Stock Dividend
After Stock Split
Paid-in capital $ $ $
Retained earnings
Total stockholders’ equity
Outstanding shares
On October 31, the stockholders’ equity section of PeleCompany’s balance sheet consists of common stock $743,200 andretained earnings $424,500. Pele is considering the following twocourses of action: (1) Declaring a 5% stock dividend on the 92,900$8 par value shares outstanding (2) Effecting a 2-for-1 stock splitthat will reduce par value to $4 per share. The current marketprice is $14 per share. Prepare a tabular summary of the effects ofthe alternative actions on the company’s stockholders’ equity andoutstanding shares.
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