Prepare entries to record the following selected transactions completed during the current fiscal year: Feb. 1 The board of directors declared a stock split that reduced the par of common shares from $100 to $20. This action increased the number of outstanding shares to 500,000. 11 Purchased 25,000 shares of the company's own stock at $44, recording the treasury stock at cost. May 1 Declared a dividend of $2.50 per share on the outstanding shares of common stock. 15 Paid the dividend declared on May 1. Oct. 19 Declared a 2% stock dividend on the common stock outstanding (the fair market value of the stock to be issued is $55.) Nov. 12 Issued the certificates for the common stock dividend declared on October 19.

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Stockholder's Equity

The stockholders’ equity (often referred to as the book value of the company) is the number of assets available to the stockholder after its entire liabilities is paid off. The stockholders’ equity is also sometimes referred to as owner's equity. The stockholders’ equity or book value generally includes common stock, treasury stock retained earnings. It is an indicator of a company's financial strength and is an important item on the company's balance sheet.