An owner of 2,500 shares of Simmons Company common stock receives a stock dividend of 50 shares. a. What is the effect of the stock dividend on the stockholder's proportionate interest (equity) in the corporation? b. How does the total equity of 2,550 shares compare with the total equity of 2,500 shares before the stock dividend?

Chapter 11, Discussion Questions #4

An owner of 2,500 shares of Simmons Company common stock receives a stock dividend of 50 shares.

a. What is the effect of the stock dividend on the stockholder's proportionate interest (equity) in the corporation?

b. How does the total equity of 2,550 shares compare with the total equity of 2,500 shares before 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...