Analysis of Stock Dividend The stockholders’

equity section of the balance sheet of Tropic Company at December 31, 2000, contained the following balances:

If Tropic declares a 5 percent stock dividend when the common shares are trading at $58 each:

a. What number of additional shares will be distributed?

b. What effect will the stock dividend have on the par value per share of Tropic’s common stock?

c. What stockholders’ equity account balances will be increased or decreased? By what amounts?

d. What effect will the stock dividend have on the book value per share of Tropic’s common stock?

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Preferred stock ($8 par; 8% dividend rate; 60,000 shares authorized; 40,000 shares issued and outstanding) Common stock ($10 par; 100,000 shares authorized; 60,000 shares issued and outstanding) Additional paid-in capital Retained earnings Total $ 320,000 600,000 290,000 750,000 $1,960,000