Currently, DeWitt Company is under pressure from sharholders. DeWitts cash balance is $1,500,000. The stock is trading for $16 a share and the equity section of its balance sheet appears as shown in Table 14. To pacify investors, the company decided to offer a 10 percent stock dividend.

a. In Table 15, reconstruct the shareholders equity section of the DeWitt balance sheet to reflect the company paying a 10 percent stock dividend. An asterisk () marks the spaces to be filled.

b. iIndicate what the new price level is expected to be.

Before Repurchase The DeWitt Company equity account, December 31, 2013

SHAREHOLDER EQUITY

Common Stock ($5 par value; 1,000,000 shares) $5,000,000

Additional paid-in capital $5,000,000

Retained earnings $15,000,000

Total shareholders equity $25,000,000

Table 15 After Repurchase The DeWitt Company equity account, December 31, 2013

SHAREHOLDER EQUITY

Common Stock (* _______ par value; *__________ shares) *_________________

Additional paid-in capital *________________

Retained earnings *________________

Total shareholders equity *_________________