he company with the common equity accounts shown here has decided on a two-for-o

Question

he company with the common equity accounts shown here has decided on a two-for-one stock split. The firm’s 39-cent-per-share cash dividend on the new (postsplit) shares represents an increase of 5 percent over last year’s dividend on the presplit stock. Common stock ($1 par value) $ 450,000 Capital surplus 1,553,000 Retained earnings 3,874,000 Total owners’ equity $ 5,877,000 What is the new par value of the stock? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) New par value $ per share

What was last year’s dividend per share? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Dividends per share last year $

Explanation / Answer

39 % of 450000 = 175500

Retained earnings represent the dividends not distributed and the same has been increased by 5%.

Un-increased dividend = 3874000/1.05 = 3689523.8

Last year's dividend = 3689523.9/175500 = 21.02

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