The condensed balance sheet of Erickson Corporation reports the following: The market price of the common shares

Question:

The condensed balance sheet of Erickson reports the following:

The condensed balance sheet of Erickson Corporation reports the following:
The

The market price of the common shares is currently $30 per share. Erickson wants to assess the impact of three possible alternatives on the corporation and its shareholders. The alternatives are:
1. Payment of a $1.50 per share cash dividend
2. Distribution of a 5% stock dividend
3. A 2-for-1 stock split
Instructions
(a) For each alternative, determine the impact on
(1) Assets,
(2) Liabilities,
(3) Common shares,
(4) Retained earnings,
(5) Total shareholders' equity, and
(6) The number of shares.
(b) Assume an Erickson shareholder currently owns 2,000 common shares at a cost of $50,000. What is the impact of each alternative for the shareholder, assuming that the market price of the shares changes proportionately with the alternative?
Taking It Further
What are the advantages and disadvantages to the company of a stock split?

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