Chapter 14, Problem 14.9P

Stock dividend: 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

1. a. Show the effects on Columbia of a 5% stock dividend.
2. b. Show the effects of (1) a 10% and (2) a 20% stock dividend.
3. c. In light of your answers to parts a and b, discuss the effects of stock dividends on stockholders’ equity.