On October 31, the stockholders’ equity section of Blossom Company’s balance sheet consists of common stock $320,000 and retained earnings $390,000. Blossom is considering the following two courses of action: 

(1) Declaring a 5% stock dividend on the 80,000 $4 par value shares outstanding 

(2) Effecting a 2-for-1 stock split that will reduce par value to $2 per share. The current market price is $13 per share. 

Prepare a tabular summary of the effects of the alternative actions on the company’s stockholders’ equity and outstanding shares.

Answer rating: 100% (QA)

Stockholders equity section 72 1 2 3 4 Stockholders equity 5 P... View the full answer