In the previous problem, suppose the company instead decides on a five-for one stock split. The firm’s 70 cents per share cash dividend on the new (post-split) shares represents an increase of 10 per cent over last year’s dividend on the pre-split equity. What effect does this have on the equity accounts? What was last year’s dividend per share?

Data from Previous problem

Stock Dividends The company with the equity accounts shown here has declared a 12 per cent stock dividend when the market value of its equity is €20 per share. What effects on the equity accounts will the distribution of the stock dividend have?

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() Ordinary shares (1 par value) 350,000 Capital surplus 1,650,000 Retained earnings Total owners' equity 3,000,000 5,000,000