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    Stock Dividends and Equity Accounts

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    The company with the following common equity accounts has declared an 8 percent stock dividend at a time when the market value of its stock is $10.00 per share. What effects on the equity accounts will the distribution of the stock dividend have?

    Common stock ($1.00 par value): $450,000
    Capital surplus: $1,550,000
    Retained earnings: $3,000,000
    Total owners equity: $5,000,000

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    Solution Summary

    The solution describes the effects on the equity accounts of the distribution of the stock dividend. All steps and formulas are shown enclosed in an Excel file.