6.00 points On July 1, Jones Corporation had the following capital structure Com
ID: 2594199 • Letter: 6
Question
6.00 points On July 1, Jones Corporation had the following capital structure Common Stock par $1:8.000,000 authorized shares 110,000 issued and Additional Paid-in Capital Retained Earnings Treasury Stodk $ 110.000 92.000 172,000 lone Required: Complete the following table based on two independent cases involving stodk transactions (Round" share" answers to 2 decimal places) Case 1: The board of directors dedlared and issued a 100 percent stock dividend when the stock price was Case 2: The board of directors voted a 2-for-1 stock split. The stock price prior to the split was $7 per $7 per share share Case 1 Case 2 Before Stock Aher 100% Transactions StockAfter Items Split Number of Shares Par Per Share Common Stock Account Additional Paid-in Capital Retained Earnings Total Stocktholders' Equity 1.00 92.000 172,000 Hints References eBook & Resources Hint O Firefox automatically sends some data to Mozilla so that we can improve your experienceExplanation / Answer
Before Stock
Transaction
After 100% stock
dividend
After Stock Split
Shares outstanding
110,000
220,000
220,000
Par per share
$1
$1
$0.5
Common stock
Account
$110,000
$220,000
110,000
Additional paid in
Capital
92,000
92,000
92,000
Retained Earnings
172,000
62,000
172,000
Treasury Stock
Nil
Nil
Nil
Total Shareholder’s
equity
374,000
374,000
374,000
Stock Dividend
Company declared 100% stock dividend so it is a large stock dividend and it will be issued at par value. So this will decrease Retain earnings as the cost will be borne by Retain earnings and this will increase No. of shares and Common stock account.
Stock Split
Stock split 2-1 means the stock is divided into two i.e. one share is divided into two. So this will increase the no. of shares and decrease par value.
Before Stock
Transaction
After 100% stock
dividend
After Stock Split
Shares outstanding
110,000
220,000
220,000
Par per share
$1
$1
$0.5
Common stock
Account
$110,000
$220,000
110,000
Additional paid in
Capital
92,000
92,000
92,000
Retained Earnings
172,000
62,000
172,000
Treasury Stock
Nil
Nil
Nil
Total Shareholder’s
equity
374,000
374,000
374,000
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