Do It! Review 11-3b

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Carla Vista Co. has had 4 years of record earnings. Due to this success, the market price of its470,000shares of $4par value common stock has increased from $15per share to $54. During this period, paid-in capital remained the same at $5,640,000. Retained earnings increased from $4,230,000to $28,200,000. CEO Don Ames is considering either (1) a15% stock dividend or (2) a 2-for-1 stock split. He asks you to show the before-and-after effects of each option on (a) retained earnings, (b) total stockholders' equity, and (c) par value per share.

(a)

1.Stock dividend - retained earnings$

2.2-for-1 stock split - retained earnings$

(b)

Carla Vista Co.

Original Balance

After Dividend

After Split

Paid-in capital$

$

$

Retained earnings

Total stockholder's equity$

$

$

Shares outstanding

(c)

1.Stock dividend - par value per share$

2.2-for-1 stock split - par value per share

$

Can you explain hoe you get to each number the equation for things.

Thanks