At June 30, 2010, Soft Fabrics Manufacturing had 150,000 shares of $7 par common stock issued and

Question:

At June 30, 2010, Soft Fabrics Manufacturing had 150,000 shares of $7 par common stock issued and outstanding. The retained earnings balance was $190,000. On July 15, 2010, Soft Fabrics declared and issued a 5% stock dividend to its common shareholders. At the time of the dividend, the market value of the stock was $15 per share.

Requirements

1. How would the stock dividend be shown in the accounting equation?

2. How many shares of stock are outstanding after the stock dividend?

3. If you owned 10% of the outstanding common stock of Soft Fabrics Manufacturing before the stock dividend, what is your percentage ownership after the stock dividend?

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...