Brooks Brothers has done very well the past year and its stock price is now trading over $100 per share. Management is considering either a 100% stock dividend or a 2-for-1 stock split.

Required:
1. Complete the following chart comparing the effects of a 100% stock dividend versus a 2-for-1 stock split on the stockholders€™ equity accounts, shares outstanding, par value, and share price.

2. What is the primary reason companies declare a large stock dividend or a stock split?

Transcribed Image Text:

After 100% Stock Dividend After 2-for-1 Stock Split Before Common stock, S1 par value S10,000 250,000 260,000 150,000 Total stockholders equity S410,000 10,000 S1 S102 Additional paid-in capital Total paid-in capital Retained earnings Shares outstanding Par value per share Share price