On October 31, the equity section of Lucerne Company consists of share capital-ordinary CHF600,000 and retained earnings

Question:

On October 31, the equity section of Lucerne Company consists of share capital-ordinary CHF600,000 and retained earnings CHF900,000. Lucerne is considering the following two courses of action:
(1) Declaring a 5% share on the 60,000 CHF10 shares outstanding
(2) Effecting a 2-for-1 share split that will reduce to CHF5 per share. The current market price is CHFI4 per share.

Instructions
Prepare a tabular summary of the effects of the alternative actions on the components of equity and outstanding shares. Use the following column headings: Before Action, After Share and After Share Split.

Dividend
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