Answer:
1. Before action
Par value of outstanding shares = 37,000 shares*$10 = $370,000
Common stock in excess of par = Total common stock - Par value of outstanding shares = $370,000 - $370,000 = $0
2. After stock dividend
Stock dividend declared = 6% of 37,000 shares = 2,220 sharea
Market price of shares = $16 per share
Stock dividend declared = $16*2,220 shares= $35,520
Common stock in excess of par = $35,520 - $22,200 = $13,320
Total number of shares outstanding = 37,000 + 2,220 = 39,220
Total par value of common stock = 39,220 * $10 = $392,200
t is out of the retained earnings that the stock dividend is declared from. So, retained earnings after stock dividend = $904,000 - $35,520 = $868,480
3. After stock split
Here , there is no financial impact. The no of shares will get X2 because one share is split into two shares.
Number of outstanding shares = 37000 shares*2 = 74000 shares. Also, no impact on the retained earnings
Before Action After-stock dividend After stock split
<em>Stockholder's equity</em>
Paid in capital $370,000.00 $392,200.00 $370,000
Common stock in $0.00 $13,320.00 $0
excess of par
Total paid in capital $370,000.00 $405,520.00 $370,000
Retained earnings $904,000.00 $868,480.00 $904,000
Total Stockholder's $1,274,000.00 $1,274,000.00 $1,274,000
equity
Outstanding shares 37000 39220 74000
Par value per share $10.00 $10.00 $5.00
