Stock Dividends. The owners” equity accounts for Trans World International are shown here:
|
Common stock ($1 par value) |
$ 25,000 |
|
Capital surplus |
170,000 |
|
Retained earnings |
530,000 |
|
Total owners” equity |
$725,000 |
a. If Trans world stock currently sells for $35 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 Trans World declared a 25 percent stock dividend, how would the accounts change?