Milwaukee Tool has the following stockholders' equity account. The firm's common stock currently sells for $3.83 per share.

Preferred stock	$ 96,000
Common stock (300,000 shares at $1.05 par)	315,000
Paid-in capital in excess of par	211,000
Retained earnings	320,000
Total stockholders' equity	$942,000

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 20% stock dividend.

c.Compare the effects in parts a and b. What are the significant differences between the two methods of paying dividends?