Exercise 11-7 On October 31, the stockholders\' equity section of Crane Company\
ID: 2530541 • Letter: E
Question
Exercise 11-7 On October 31, the stockholders' equity section of Crane Company's balance sheet consists of common stock $507,000 and retained earnings $413,000. Crane is considering the following two courses of action: (1) Declaring a 7% stock dividend on the 84,500 $6 par value shares outstanding (2) Effecting a 2-for-1 stock split that will reduce par value to $3 per shane The current market price is $17 per share. Prepare a tabular summary of the effects of the alternative actions on the company's stockholders equity and outstanding shares. Crane Company's Balance Sheet Before Action After Stock Dividend After Stock Stockholders' equity Paid-in capital Retained earnings Total stockholders equity $ Outstanding sharesExplanation / Answer
Ans:
Crane Company's Balance sheet
Before action
After stock Dividend
After Stock Split
Stockholder's equity
paid -in Capital($)
507000
607555
507000
Retained earnings
413000
312445
413000
Total stockholder's equity($)
920000
920000
920000
Outstanding shares
84500
90415
169000
Crane Company's Balance sheet
Before action
After stock Dividend
After Stock Split
Stockholder's equity
paid -in Capital($)
507000
607555
507000
Retained earnings
413000
312445
413000
Total stockholder's equity($)
920000
920000
920000
Outstanding shares
84500
90415
169000
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