Stock Dividends
The owners’ equity accounts for Octagon International are shown here:
|
Common stock ($1 par value) |
$ 10,000 |
|
Capital surplus |
150,000 |
|
Retained earnings |
552,500 |
|
Total owners’ equity |
$712,500 |
a. If Octagon stock currently sells for $20 per share and a 10 percent stock dividend is declared, how many new shares will be distributed? Show how the equity accounts would change.
b. If Octagon declared a 25 percent stock dividend, how would the accounts change?