Jennifer Vera, Inc., is the only company with a distribution network for its imported goods. The company does a brisk business with specialty stores such as Neiman Marcus, Saks Fifth Avenue, and Nordstrom. Vera's recent success has made the company a prime target for a takeover. Against the wishes of Vera's board of directors, an investment group from France is attempting to buy \(51 \%\) of Vera's outstanding stock. Board members are convinced that the French investors would sell off the most desirable pieces of the business and leave little of value.

At the most recent board meeting, several suggestions were advanced to fight off the hostile takeover bid. One suggestion is to increase the stock outstanding by distributing a \(100 \%\) stock dividend. The intent is to spread the company's ownership in order to make it harder for the French group to buy a controlling interest.

Requirement 

As a significant stockholder of Jennifer Vera, Inc., write a short memo to explain to the board whether distributing the stock dividend would make it difficult for the investor group to take over the company. Include in your memo a discussion of the effect that the stock dividend would have on assets, liabilities, and total stockhoiders' equity-that is, the dividend's effect on the size of the corporation. Journalizing dividend and treasury stock transactions; reporting retained earnings and stockholders' equity.