A Stock Dividend and a Stock Split
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Contrast the differences between a stock dividend and a stock split
In the Stock dividend, there is an issue of additional shares to the existing shareholders on a proportional basis. A stock split involves dividing the existing shares to get multiple allocations.
Stock dividends are payable as additional shares when the corporation lacks enough money to pay cash dividends to satisfy the shareholders. A stock split controls the market price when it is too high to motivate the investors.
A stock dividend needs journal entry for transferring the amount from the section of retained earnings of the balance sheet to the component of paid-in-capital. A stock split will not change balances on the general ledger account as well as not change the amount on the equity section of stockholders in the balance sheet (Bechmann & Raaballe, 2007).
Determine whether you would prefer to see the company that you researched declares a 100% stock dividend or declare a two-for-one split
I would prefer to see the firm that I researched declare a two for one split. The enterprise I researched is Coca Cola Company in demand for the soft drink Coke and has been successful for many years. It was number six on the Forbes list in the year 2018 for having valuable brands in the world, and its value was $57.3billion. The investors in the corporation ten years ago made the right decision, and the pay was good, where an investment of $1000 in 2009 was worth above $2800 in the year 2019.
Accepting two for one split will benefit Coca Cola Company because it will attract more investors since the brand has been operating for more than a century. The past performance and good track record make it competitive in the market, implying that more investors will be available to purchase stock once there is a two for one split (Bechmann & Raaballe, 2007).