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

Common stock ($1 par value) $ 350,000 Capital surplus 1,650,000 Retained earnings 3,000,000 Total owners’ equity $5,000,000 LO.1