Question

The ordinary shares of Warner Inc. are 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 share split.
(b) The board votes a 100% share 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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  • CreatedJune 17, 2013
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