A company, whose common equity accounts follow, has declared a 10% stock dividend at a time when the market value of its stock is $12 per share. What effects on the equity accounts will the distribution of the stock dividend have?

Common stock($1 par) $2,000,000

Paid-in excess 4,000,000

Retained Earnings 5,000,000

Total equity $11,000,000

Q2: In the previous question, suppose that the company instead decides on a four-for-one stock split. The firm's 25% cent cash dividend on the new (split) shares represents an increase 10% over last year's dividend on presplit stock. What effect does thsi have on the equity accounts? What was last year's dividend per share?