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On October 31, the stockholders' equity section of Omar Company consists of common stock $600,000 and retained earnings $900,000. Omar is considering the following two courses of action: (1) declaring a 5% stock dividend on the 60,000, $10 par value shares outstanding, or (2) effecting a 2-for-1 stock split that will reduce par value to $5 per share. The current market price is $14 per share.
Complete the tabular summary of the effects of the alternative actions on the components of stockholders' equity, outstanding shares, and book value per share.
On January 1, 2008, Castle Corporation had retained earnings of $550,000. During the year, Castle had the following selected transactions.
1. Declared cash dividends $120,000.
2. Corrected overstatement of 2007 net income because of depreciation error $30,000.
3. Earned net income $350,000.
4. Declared stock dividends $80,000.
Complete the retained earnings statement for the year.