At the beginning of 2015, the shareholders’ equity section of the statement of financial position of Ponti Corporation reflected the following:
Common shares, no par value, authorized unlimited number of shares,
issued and outstanding 36,000 shares ........$ 360,000
Retained earnings ................. 750,000
On February 1, 2015, the board of directors declared a 100 percent stock dividend to be issued on April 30, 2015. The price per common share was $ 18 on February 1, 2015.
Required:
1. For comparative purposes, prepare the shareholders’ equity section of the statement of financial position
(a) Before the stock dividend
(b) After the stock dividend.
2. Explain the effects of this stock dividend on assets, liabilities, and shareholders’ equity.