The owners equity accounts for Vidi International are shown here: Common stock ($.50 par value) ............................ $

Question:

The owners’ equity accounts for Vidi International are shown here:

Common stock ($.50 par value) ............................ $ 25,000
Capital surplus ......................................................... 215,000
Retained earnings ................................................... 642,700
Total owners’ equity .............................................. $882,700

a. If the company’s stock currently sells for $32 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 the company declared a 25 percent stock dividend, how would the accounts change?

Data from problem 2

Ginger, Inc., has declared a $5.35 per share dividend. Suppose capital gains are not taxed, but dividends are taxed at 15 percent. New IRS regulations require that taxes be withheld at the time the dividend is paid. The company’s stock sells for $74.20 per share, and the stock is about to go ex dividend. What do you think the ex-dividend price will be?

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...