The stockholders' equity for Little Wonders Company on August 13, 2017, follows: On August 13, 2017, the

Question:

The stockholders' equity for Little Wonders Company on August 13, 2017, follows:

On August 13, 2017, the market price of Little Wonders common stock was $20 per share. Assume Little Wonders declared and distributed a 25% stock dividend on this date. (Treat the stock dividend as a small stock dividend.)
Requirements
1. Journalize the declaration and distribution of the stock dividend.
2. Prepare the stockholders' equity section of the balance sheet after the stock dividend.
3. Why is total stockholders' equity unchanged by the stock dividend?
4. Suppose Little Wonders had a cash balance of $530,000 on August 14, 2017. What is the maximum amount of cash dividends Little Wonders can declare?

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