In the past year, Cormier Corporation declared a 10% stock dividend, and Fegan, Inc. announced a 2-for-1

Question:

In the past year, Cormier Corporation declared a 10% stock dividend, and Fegan, Inc. announced a 2-for-1 stock split. Your parents own 100 shares of each company’s $50 par value common stock. During a recent phone call, your parents ask you, as an accounting student, to explain the differences between the two events.

Instructions

Write a letter to your parents that explains the effects of the two events to them as stockholders and the effects of each event on the financial statements of each corporation.

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...