The company with the common equity accounts shown here has declared a stock dividend of 15

percent when the market value of its stock is Rs.45 per share. What effects on the equity

accounts will the distribution of the stock dividend have?(3)

S# Details Amount (Rs. )

1 Common stock (Rs. 1 Par) 410,000

2 Capital surplus 2,150,000

3 Retained earning 5,320,000

Total 7,880,000

You are required to compute the following:

a) Recalculate the shareholder equity if the company pays 15 percent stock dividend.

b) If company declared 5 for 3 stock split

c) What will happen if there is a reverse stock split of 1 for 3?