Austin Power Company has the following balance sheet:

The firm has a market price of $11 a share.
a. Show the effect on the capital account(s) of a two-for-one stock split.
b. Show the effect on the capital account of a 10 percent stock dividend. Part b is separate from part a. In part b do not assume the stock split has taken place.
c. Based on the balance in retained earnings, which of the two dividend plans is more restrictive on future cash dividends?

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Assets Cash. Accounts receivable Fixed assets $ 50,000 250,000 700,000 $1,000,000 Total assets Liabilities $ 250,000 Accounts payable Notes payable Common stock 100,000 shares $2 par Capital in excess of par Retained earnings.. 200,000 accounts $1,000,000