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The common stock of Alexander Hamilton Inc. is currently selling at $120 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. 9 million shares are issued and outstanding. Instructions Prepare the necessary journal entries assuming the following. The board votes a 2-for-l stock split. The board votes a 100% stock dividend. Briefly discuss the accounting and securities market differences between these two methods of increasing the number of shares outstanding.

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Answer:

No Entry is required for a stock split

Retained Earnings 90,000,000

Common Stock Dividend Distributable 90,000,000

(to record the declaration)

Common Stock Dividend Distributable 90,000,000

Common Stock 90,000,000

(to record the distribution)

Explanation:

see the attached file

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