Problem - On October 31, the stockholders' equity section of Pele Company's balance sheet consists of common stock $327,600 and retained earnings $423,000.
Pele is considering the following two courses of action:
(1) Declaring a 5% stock dividend on the 81,900 $4 par value shares outstanding
(2) Effecting a 2-for-1 stock split that will reduce par value to $2 per share.
The current market price is $16 per share.
Prepare a tabular summary of the effects of the alternative actions on the company's stockholders' equity and outstanding shares.