The owners’ equity accounts for Octagon International are shown here:

a. If Octagon stock currently sells for $20 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 Octagon declared a 25 percent stock dividend, how would the accounts change?

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Common stock ($1 par value) Capital surplus Retained earnings Total owners' equity $ 10,000 150,000 552,500 $712,500