E15-13B (Stock Split and Stock Dividend) The common stock of Liberty Homes Inc. is currently selling at $88 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 $4; book value i

E15-13B (Stock Split and Stock Dividend) The common stock of Liberty Homes Inc. is currently selling at $88 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 $4; book value is $36 per share. Fifteen million shares are issued and outstanding.

Instructions

Prepare the necessary journal entries assuming the following.

(a) The board votes a 4-for-1 stock split.

(b) The board votes a 300% stock dividend.

(c) Briefly discuss the accounting and securities market differences between these two methods of increasing the number of shares outstanding.