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This window shows what is correct and incorrect for the work you have completed so far Even If all of the work you have done so far is correct, you may not have completed everything 5. E11-14 Comparing 100 Percent Stock Dividend and 2-for-1 Split [LO 11-3) On July 1, Jones Corporation had the following capital structure: Common Stock, par $1, 8,000,000 authorized shares, 105,000 issued and outstanding Additional Paid-in Capital Retained Earmings Treasury Stock $105,000 91,000 171,000 None Required: Complete the following table based on two independent cases involving stock transactions: (Round "per share" answers to 2 decimal places.) Case 1: The board of directors declared and issued a 100 percent stock dividend when the stock price was $7 per share. Case 2: The board of directors voted a 2-for-1 stock split. The stock price prior to the split was $7 per share. Answer is complete but not entirely correct. Case 1 After 100% Stock Case 2 After Stock Before Stock tems Transactions Dividend Number of Shares Outstanding Par Per Share Common Stock Account 105,000. 210,000 210,000 $ 1.00 5 1005 0.50 1,050,000 210,00010,50o 1.00 0.50 91,000 | 91,000 91,000 171,000 66,000 171,000 Total Stockholders' Equity $1312.000 367.000367,000 Additional Paid-in Capital Retained Eamings

Explanation / Answer

Solution:

Item

Before Stock Transaction

Case 1

Case 2

After 100% Stock Dividend

After Stock Split

Number of Shares Outstanding

105000

210000

(105,000 Shares old + Dividend 105,000 Shares)

210000

(105,000 Old Shares + 105,000 New Shares from stock split)

Par Per Share

$1

$1

$0.50

(Old Common Stock Value $105,000 / Total Number of Shares after stock split 210,000)

Common Stock Account

$105,000

(105,000 Shares x $1)

$210,000

(210,000 Shares x $1)

$105,000

Additional Paid in Capital

$91,000

$91,000

$91,000

Retained Earnings

$171,000

$66,000

($171,000 Old – Dividend $105,000)

$171,000

Total Stockholders' Equity

$367,000

$367,000

$367,000

Note – Stock Split does not increase the value of Common Stock. It will be adjusted or decrease the par Value of the shares.

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Item

Before Stock Transaction

Case 1

Case 2

After 100% Stock Dividend

After Stock Split

Number of Shares Outstanding

105000

210000

(105,000 Shares old + Dividend 105,000 Shares)

210000

(105,000 Old Shares + 105,000 New Shares from stock split)

Par Per Share

$1

$1

$0.50

(Old Common Stock Value $105,000 / Total Number of Shares after stock split 210,000)

Common Stock Account

$105,000

(105,000 Shares x $1)

$210,000

(210,000 Shares x $1)

$105,000

Additional Paid in Capital

$91,000

$91,000

$91,000

Retained Earnings

$171,000

$66,000

($171,000 Old – Dividend $105,000)

$171,000

Total Stockholders' Equity

$367,000

$367,000

$367,000

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