Problem $10-3$A $($Algo$)$ Indicate effect of stock dividends and stock splits $($LO$10-6)$

Big Meadows Sports has been very profitable in recent years and has seen its stock price steadily increase to over $$100$ per share. The CFO thinks the company should consider either a $100\%$ stock dividend or a $2-$for$-1$ stock split.

Required:

$1.$ Complete the following table comparing the effects of a $100\%$ stock dividend versus a $2-$for$-1$ stock split on the stockholders$$ equity accounts, shares outstanding, par value, and share price.

$2.$ State whether the statement "The primary reason companies declare a large stock dividend or a stock split is to lower the trading price of the stock to a more acceptable trading range, making it attractive to a larger number of potential investors." is true or false.

Complete this question by entering your answers in the tabs below.

Required $1$Required $2$

Complete the following table comparing the effects of a $100\%$ stock dividend versus a $2-$for$-1$ stock split on the stockholders$$ equity accounts, shares outstanding, par value, and share price. $($Round "Par value per share" to $2$ decimal places.$)$

Before After $100\%$ Stock Dividend After $2-$for$-1$ Stock Split

Common stock, $$1$ par value $$1,000$

Additional paid$-$in capital $47,000$

Total paid$-$in capital $48,000$

Retained earnings $22,650$

Total stockholders' equity $$70,650$

Shares outstanding $1,000$

Par value per share $$1\mathrm{.}00$

Share price $$106$