On October 31, the stockholders equity section of Pele Companys balance sheet consists of common stock $648,000

Question:

On October 31, the stockholders’ equity section of Pele Company’s consists of $648,000 and retained earnings $400,000. Pele is considering the following two courses of action: (1) declaring a 5% stock on the 81,000 $8 shares outstanding or (2) effecting a 2-for-1 stock split that will reduce to $4 per share. The current market price is $17 per share.
Instructions
Prepare a tabular summary of the effects of the alternative actions on the company’s stockholders’ equity and outstanding shares. Use these column headings: Before Action, After Stock and After Stock Split.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Dividend
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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,...