On June 30, 2017, Sharper Corporation\'s common stock is priced at $62 per share

Question

On June 30, 2017, Sharper Corporation's common stock is priced at $62 per share before any stock dividend or split, and the stockholders' equity section of its balance sheet appears as follows Camon stock-$10 par value, 120,000 shares authorized, 50,000 shares issued and outstanding Paid-in capital in excess of par value, cammon stock Retained earnings $500,000 200,000 660,000 $1,360,000 Total stockholders' equity I. Assume that the company declares and immediately distributes a 50% stock dividend. This event is recorded by capitalizing retained earnings equal to the stock's par value. Answer these questions about stockholders' equity as it exists afterissuing the new shares a..b.B c. Complete the below table to calculate the retained earnings balance, total stockholders' equity and number of outstanding shares. 2. Assume that the company implements a 3-for-2 stock split instead of the stock dividend in part 1. Answer these questions about stockholders' equity as it exists after issuing the new shares a.,b.& C. Complete the below table to calculate the retained earnings balance, total stockholders' equity and number of outstanding shares.

Explanation / Answer

1 Assume that the company declares and immediately distributes a 50% stock dividend Stock Dividend Before Stock Dividend Impact of stock dividend After stock dividend Common Stock 500000 250000 750000 Paid in capital in excess of par value 200000 0 200000 Total contributed capital 700000 250000 950000 Retained earnings 660000 -250000 410000 Total stockholder's equity 1360000 0 1360000 Number of shares outstanding 50000 25000 75000 2 Assume that the company implements a 3-for-2 stock split instead of the stock dividend Stock Dividend Before Stock Split Impact of stock Split After stock Split Common Stock 500000 0 500000 Paid in capital in excess of par value 200000 0 200000 Total contributed capital 700000 0 700000 Retained earnings 660000 0 660000 Total stockholder's equity 1360000 0 1360000 Number of shares outstanding 50000 25000 75000 There is no impact on common stock or retained earnings in stock split, only the number of shares increases

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