On October 31, the stockholders' equity section of Ivanhoe Company's balance sheet consists of common stock...

Transcribed Image Text:

On October 31, the stockholders' equity section of Ivanhoe Company's balance sheet consists of common stock $664,000 and retained earnings $393,000. Ivanhoe is considering the following two courses of action: (1) declaring a 6% stock dividend on the 83,000, $8 par value shares outstanding or (2) effecting a 2-for-1 stock split that will reduce par value to $4 per share. The current market price is $16 per share. Prepare a tabular summary of the effects of the alternative actions on the company's stockholders' equity and outstanding shares. Before Action After Stock Dividend After Stock Split 5 A Stockholders' equity Paid-in capital Retained earnings Total stockholders' equity Outstanding shares $ $ On October 31, the stockholders' equity section of Ivanhoe Company's balance sheet consists of common stock $664,000 and retained earnings $393,000. Ivanhoe is considering the following two courses of action: (1) declaring a 6% stock dividend on the 83,000, $8 par value shares outstanding or (2) effecting a 2-for-1 stock split that will reduce par value to $4 per share. The current market price is $16 per share. Prepare a tabular summary of the effects of the alternative actions on the company's stockholders' equity and outstanding shares. Before Action After Stock Dividend After Stock Split 5 A Stockholders' equity Paid-in capital Retained earnings Total stockholders' equity Outstanding shares $ $