The shareholders equity accounts for Hexagon International are shown here: Common stock ($1 book value).................. $ 30,000

Question:

The shareholders’ equity accounts for Hexagon International are shown here:

Common stock ($1 book value).................. $ 30,000

Capital surplus................................................185,000

Retained earnings..........................................627,500

Total shareholders’ equity..........................$842,500

a. If Hexagon stock currently sells for $37 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 Hexagon declared a 25 percent stock dividend, how would the accounts change?

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...