The common stock of Warner Inc. is currently selling at $110 per share. The directors wish to

Question:

The common stock of Warner Inc. is currently selling at $110 per share. The directors wish to reduce the share price and increase share volume prior to a new issue. The per share par value is $10; book value is $70 per share. Five million shares are issued and outstanding.

Instructions
Prepare the necessary journal entries assuming the following.
  (a) The board votes a 2-for-1 stock split.
  (b) The board votes a 100% stock dividend.
  (c) Briefly discuss the accounting and securities market differences between these two methods of increasing the number of shares outstanding.

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Related Book For  book-img-for-question

Intermediate Accounting

ISBN: 978-0470587287

14th Edition

Authors: kieso, weygandt and warfield.

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