Sealand Company has 100,000 common shares outstanding. Because it wants to retain its cash fowl to use for other purposes, the company has decided to issue stock dividends to its shareholders. The market price of each Sealand Company share is $22.
a. Prepare the journal entries if the company decides to declare and issue a 10% stock dividend.
b. Prepare the journal entry if instead of declaring the stock dividend the company decides to split its shares two-for-one.
c. What should happen to the market price of the company’s shares in part “a”? In part “b”?
d. Based on the current share price, do you think it is likely the company would split its shares? Why or why not?

  • CreatedJune 12, 2015
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