E15-13 (a,b) (Stock Split and Stock Dividend)
The common stock of Warner Inc. is currently selling at $110 per share. The directors wish to reduce the share price and increase share volume prior to a new issue. The per share par value is $10; book value is $70 per share. Five million shares are issued and outstanding.
a. How much is the debit to retained earnings if the board votes a 2-for-1 stock split?
b. Prepare the necessary journal entries if the board votes a 100% stock dividend.