Discuss the effects of stock dividends on stockholder

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Reference no: EM131109198

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.

Reference no: EM131109198

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