if octagon stock currently sells for 20 per share and a 10 percent stock dividend is 562826

Stock Dividends

The owners’ equity accounts for Octagon International are shown here:

Common stock ($1 par value)

$ 10,000

Capital surplus

150,000

Retained earnings

552,500

Total owners’ equity

$712,500

a. If Octagon stock currently sells for $20 per share and a 10 percent stock dividend is declared, how many new shares will be distributed? Show how the equity accounts would change.

b. If Octagon declared a 25 percent stock dividend, how would the accounts change?

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