Answer:
1.
a.
$9,788,000
b.
$12,700,000
2.
a.
$18,860,000
b.
$18,860,000
Explanation:
Stock dividend is the payment of dividend to stockholder in the form of stock/shares of the company. Stock are issued at the market price and the value of the dividend is transferred from the retained earning to the add-in-capital accounts.
Stock Dividend = 350,000 x 16% x $52 = $2,912,000
Stock split increase the numbers of shares with a specific given ratio but the common equity value remains same that's why the par value of the share decreases with respective ratio.
Stock Split = 350,000 x 2 / 1 x $5/2 = $1,750,000
Total Stockholders equity section includes the paid in capital of common and preferred stocks, additional paid in capital, retained earnings and reserves accounts.
Total Stockholders equity
Common Stock $1,750,000
Paid In Capital account $4,410,000.
Retained Earning <u>$12,700,000</u>
Total Stockholder's Equity <u>$18,860,000</u>
1.
a.
Retained Earning = $12,700,000 - $2,912,000 = $9,788,000
b.
NO change in retained earning after stock split. Stock split only changes the outstanding numbers of shares and par value of the share.
2.
a.
It will remains the same because balances are transferred from retained earnings to the common stock and paid in capital accounts but the total balance remains the same.
b.
As there is no changes to value of any equity account, so total stockholders equity will remain the same.
