Sammy\'s sportshops has been very profitable in recent years and has seen its st

Question

Sammy's sportshops has been very profitable in recent years and has seen its stock price steadly increase to over 5100 per share. The CFO thinks the company should consider either a 100% stock dMc end or a 2-for-1 stock Split Required information 0.58 polnts Required: 1. Complete he n owing table companng the effects o a 100% stock di dend versus places.) 2 r 1 stock spi n the stockholders ec urt accounts shares outstanding par value and share prie Round "Par value per share o 2 decimal Stock After 2-for-1 Dividend Stock Split Before Cammon stock, $1 par value S 1,100 dational paid-in capital 43,000 Total paid-in capital Retained eamings 44 1 22 250 S 66,350 1, 100 S 1.00 5 8 Total stockholders' equity Shares oulstariding Par value per share Sharc price eBook & Resources Worksheet Difficulty 2 Modiurm Objective: 10 06 Explain the effect of stock dividends and stock split Required information 0.72 points 2. The primary reason companies declare a large stock dlvidend or a stock split is to lower the trading price of the stock to a more acceptable trading range, making It attractve to a larger number of potential Investors True False

Explanation / Answer

Details Before After 100% stock dividend After 2 for 1 stock split Common stock $         1,100.00 $                   2,200.00 $           1,100.00 Additional paid in captial $       43,000.00 $                43,000.00 $        43,000.00 Total paid in captial $       44,100.00 $                45,200.00 $        44,100.00 Retained earnings $       22,250.00 $                21,150.00 $        22,250.00 Total stockholders equity $       66,350.00 $                66,350.00 $        66,350.00 No. of shares outstanding             1,100.00                       2,200.00               2,200.00 Par value pre share $                 1.00 $                           1.00 $                   0.50 Market price per share $               96.00 $                         48.00 $                 48.00 Details Before After 100% stock dividend After 2 for 1 stock split Common stock 1100 =1100+1100 1100 Additional paid in captial 43000 43000 43000 Total paid in captial =+C5+C4 =+D5+D4 =+E5+E4 Retained earnings 22250 =+C7-1100 22250 Total stockholders equity =+C7+C6 =+D7+D6 =+E7+E6 No. of shares outstanding 1100 =+C9+1100 =+D9 Par value pre share 1 1 =+D10/2 Market price per share 96 =+C11*50% =96/2

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