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    Accounting for Stock Dividends

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    Owner's equity accounts for a company are below:

    common stock ($1 par value) $ 10,000
    Capital Surplus 180,000
    Retained earnings 586,000

    Total owners equity $776,500

    a. If the company's stock sells for $25 per share and a 10 % stock dividend is declared, how many new shares will be distributed? Show how the equity accounts would change.
    b. If the company declared a 25 % stock dividend, how would accounts change?

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    Solution Summary

    The solution shows how equity accounts would change in the case of stock dividends.