The owners equity accounts for Southern Lights International are shown here: Common stock. ($1 par value).....................$ 25,000

Question:

The owners’ equity accounts for Southern Lights International are shown here:
Common stock. ($1 par value).....................$ 25,000
Capital surplus................................................135,000
Retained earnings..........................................787,600
Total owners’ equity.....................................$947,600
a. If the company’s stock currently sells for $30 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 the company declared a 25 percent stock dividend, how would the accounts change?

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...