Johore Trading Company has 2.4 million shares of common stock outstanding, and the present market price per share is $36. Its equity capitalization is as follows:
Common stock ($2.00 par; 2,400,000 shares)
$ 4,800,000
Additional paid-in capital
5,900,000
Retained earnings
87,300,000
Total shareholders' equity
$98,000,000
a. If the company were to declare a 12 percent stock dividend, what would happen to these accounts? A 25 percent stock dividend? A 5 percent stock dividend?
b. If, instead, the company declared a 3-for-2 stock split, what would happen to the accounts? A 2-for-1 stock split? A 3-for-1 split?
c. What would happen if there were a reverse stock split of 1 for 4? 1 for 6?