Cash versus stock dividendMilwaukee Tool has the following stockholders' equity account. The firm's common stock currently sells for

$3.14

per share.

Preferred stock	$ 96,000
Common stock (400,000 shares at $0.93 par)	372,000
Paid-in capital in excess of par	182,000
Retained earnings	400,000
Total stockholders' equity	$1,050,000

a. Show the effects on the firm of a cash dividend of

$0.20

per share.b. Show the effects on the firm of a

10%

stock dividend.c.Compare the effects in parts a and

b.

What are the significant differences between the two methods of paying dividends?a.The balance in preferred stock after the

$0.20

cash dividend is

$nothing.

(Round to the nearest dollar.)The balance in common stock after the

$0.20

cash dividend is

$nothing.

(Round to the nearest dollar.)The balance in paid-in capital after the

$0.20

cash dividend is

$nothing.

(Round to the nearest dollar.)The balance in retained earnings after the

$0.20

cash dividend is

$nothing.

(Round to the nearest dollar.)The balance in total stockholders' equity after the

$0.20

cash dividend is

$nothing.

(Round to the nearest dollar.)b.The balance in preferred stock after the

10%

stock dividend is

$nothing.

(Round to the nearest dollar.)The balance in common stock after the

10%

stock dividend is

$nothing.

(Round to the nearest dollar.) The balance in paid-in capital after the

10%

stock dividend is

$nothing.

(Round to the nearest dollar.)The balance in retained earnings after the

10%

stock dividend is

$nothing.

(Round to the nearest dollar.)The total stockholder's equity after the

10%

stock dividend is

$nothing.

(Round to the nearest dollar.)c.Compare the effects in parts a and

b.

What are the significant differences between the two methods of paying dividends?(Select from the drop-down menus.)

Cash dividends

Stock dividends

do not affect stockholders' equity; they only redistribute retained earnings into common stock and additional paid-in capital accounts.

Cash dividends

Stock dividends

cause a decrease in retained earnings and, hence, in overall stockholders' equity.

Enter your answer in each of the answer boxes.