In problem 19.8, suppose the company instead decides on a five-for-one stock split. The firm’s $0.45 per share cash dividend on the new (post-split) shares represents an increase of 10 percent over last year’s dividend on the pre-split stock. What effect does this have on the equity accounts? What was last year’s dividend per share?

In problem 19.8

Common stock ($1 par value)..........$ 410,000

Capital surplus...................................2,150,000

Retained earnings.............................5,320,000

Total shareholders’ equity.............$7,880,000