Analyze and record stock dividend transactions. (LO 4)

At December 31, 2007, Robby's Shoe Company had 200,000 shares of \(\$ 5\) par common stock issued and outstanding. The retained earnings balance was \(\$ 165,000\). On January 15, 2008 , Robby's issued a \(3 \%\) stock dividend to its common shareholders. At the time of the dividend, the market value of the stock was \(\$ 20\) per share.

\section*{Required}

a. How would the stock dividend be shown in the accounting equation?

b. How many shares of stock are outstanding after the stock dividend?

c. If you owned \(5 \%\) of the outstanding common stock of Robby's Shoe Company before the stock dividend, what is your percentage ownership after the stock dividend?