At the beginning of the year, the stockholders’ equity section of the balance sheet of R & B Corporation reflected the following:
Common stock (par $12; authorized 65,000
shares, outstanding 30,000 shares) ... $360,000
Capital in excess of par .......... 120,000
Retained earnings ........... 736,000

On February 1, 2009, the board of directors declared a 60 percent stock dividend to be issued April 30, 2009. The market value of the stock on February 1, 2009, was $15 per share.

Required:
1. For comparative purposes, prepare the Stockholders’ Equity section of the balance sheet
(a) Immediately before the stock dividend and
(b) Immediately after the stock dividend.
2. Explain the effects of this stock dividend on assets, liabilities, and stockholders’ equity.