Effect of stock dividend on equity
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Firm Columbia Paper has the following stockholders' equity account. The firm's common stock has a current market price of $30 per share.
Preferred stock $100,000
Common stock (10,000 shares at $2 par) 20,000
Paid-in capital in excess of par 280,000
Retained earnings 100,000
Total stockholders' equity $500,000
a. Show the effects on Columbia of a 5% stock dividend.
b. Show the effects of (1) a 10% and (2) a 20% stock dividend.
c. In light of your answers to parts a and b, discuss the effects of stock dividends on stockholders' equity.
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Solution Summary
The Solution uses the Firm Columbia Paper example company to find stock dividends and their effects on stockholder's equity.
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