As of December 31, 2010, Hargrove Dynamics, Inc., had 75,000 shares of $5 par value common stock issued and outstanding. The retained earnings balance was $265,000. On January 15, 2011, Hargrove Dynamics declared and issued an 8% stock dividend to its common shareholders. At the time of the dividend, the market value of the stock was $25 per share.

1. Show how the stock dividend would affect the accounting equation.
2. How many shares of stock are outstanding after the stock dividend?
3. If you owned 7% of the outstanding common stock of Hargrove Dynamics, Inc., before the stock dividend, what is your percentage ownership after the stock dividend?

  • CreatedSeptember 01, 2014
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