Answer:
<u>15% stock dividend</u>
before after
retained earnings $13,500,000 $10,057,500
common stock $900,000 $1,035,000
APIC $2,700,000 $6,007,500
stockholders' equity $17,100,000 $17,100,000
par value $2 per stock $2 per stock
<u>2 for 1 stock split</u>
before after
retained earnings $13,500,000 $13,500,000
common stock $900,000 $900,000
APIC $2,700,000 $2,700,000
stockholders' equity $17,100,000 $17,100,000
par value $2 per stock $1 per stock
Explanation:
market price increased from $12 to $51 (450,000 stocks outstanding x $2 par value)
additional paid in capital $2,700,000
retained earnings increased from $2,025,000 to $13,500,000
15% stock dividend, small stock dividend, journal entry:
Retained earnings 3,442,500 (= 450,000 stocks x 15% x $51)
Cr Common stock 135,000 (= 67,500 stocks x $2)
Cr Additional paid in capital 3,307,500
2 for 1 stock split does not require a journal entry since no values are changed in the balance sheet, only the number of stocks change and teh par value decreases by 50%
