Accounting for Stock Splits and Dividends
The Addington Book Company has the following equity position. The stock is currently selling for $3 per share.
|
common Stock
(8 million shares outstanding, $3 par)
|
16,000,000
|
|
Paid in excess
|
4,000,000
|
|
Retained earnings
|
12,000,000
|
|
Total common equity
|
32,000,000
|
|
Book value per share
|
$4.00
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a. What was the average price at which the company originally sold its stock?
b. Reconstruct the equity statement above to reflect a four for one stock spit.
c. Reconstruct the statement to reflect a 12.5% stock dividend.