Morgan Incorporated is looking to increase its number of shares of outstanding common stock to bring down its stock price. The board of directors is trying to decide if a 2-for-1 stock split or a 100% stock dividend is more appropriate. Morgan's stockholders' equity follows:

Required
a. Assess the pros and cons of the stock split versus the stock dividend.
b. Create a new stockholders' equity section if Morgan chooses
(1) A stock dividend
(2) A stock split.

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Common stock, $2 par, 100,000 shares issued and outstanding Additional paid-in capital Retained earnings S 200,000 660,000 775,000 $1,635,000 Total stockholders' equity