On December 31, 2012, the shareholders' equity section of the statement of financial position of \(\mathrm{R} \& \mathrm{~B}\) Corporation reflected the following:

On February 1, 2013, the board of directors declared a 12 percent stock dividend to be issued April 30, 2013. The market value per share was \(\$ 18\) on the declaration date.
\section*{Required:}
1. For comparative purposes, prepare the shareholders' equity section of the statement of financial position

(a) before the stock dividend and

(b) after the stock dividend. (Hint: Use two columns for this requirement.)
2. Explain the effects of this stock dividend on the company's assets, liabilities, and shareholders' equity.

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Common shares (no par value, authorized 60,000 shares, outstanding 25,000 shares) Contributed surplus Retained earnings Accumulated other comprehensive income $250,000 12,000 75,000 8,000