On October 31, the stockholders' equity section of Pharoah Company consists of common stock $330,000 and retained earnings $896,000. Pharoah is considering the following two courses of action: (1) declaring a 7% stock dividend on the 33,000, $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. Prepare a tabular summary of the effects of the alternative actions on the components of stockholders' equity, outstanding shares, and par value per share.

Before action $33,000

After stock dividend $35,310

After stock split $146,200

Explanation:

BEFORE ACTION

Stockholder Equity:

Paid In Capital

Common Stock $330,000

In Exess Par Value $0

Total Paid In Capital $330,000

Retained Earnings $896,000

Total StockholderEquity $1,226,000

Oustanding Shares $33,000

AFTER STOCK DIVIDEND

Stockholder Equity:

Paid In Capital

Common Stock $353,100

(7%×330,000+330,000)

In Exess Par Value $6,600

(33,000/5)

Total Paid In Capital $359,700

Retained Earnings $866,300

Total StockholderEquity $1,226,000

Oustanding Shares $35,310

AFTER STOCK SPLITS

Stockholder Equity:

Paid In Capital

Common Stock $330,000

In Exess Par Value $0

Total Paid In Capital $330,000

Retained Earnings $896,000

Total StockholderEquity $1,226,000

Oustanding Shares $146,200

in 2001, dell computer became the world’s largest personal computer vendor, continuing to

gain market share and post profits in an industry struggling with slumping sales and billions of

dollars in losses. dell sells 90% of its pcs directly to the final customer, largely bypassing the

reseller channel that accounts for most of the world’s pc sales. this direct customer relationship

is the key to dell’s business model, and provides distinct advantages over the indirect sales

model. dell’s direct relationship with the customer allows it to tailor its offerings to customer

needs, offer add-on products and services, and use the internet to offer a variety of customer

services. in addition, dell’s pcs are built to customers’ specifications upon receipt of an order,

giving dell additional advantages over indirect pc vendors who must try to forecast demand and

ship products based on those forecasts. dell’s direct sales and build-to-order model has achieved

superior performance in the pc industry in terms of inventory turnover, reduced overhead, cash

conversion, and return on investment (kraemer, et al., 2000).

explanation:

first one

explanation: