Cash versus stock dividend Milwaukee Tool has the following stockholders' equity account. The firm's common stock...

 

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Cash versus stock dividend Milwaukee Tool has the following stockholders' equity account. The firm's common stock currently sells for $3.82 per share. Preferred stock Common stock (100,000 shares at $1.04 par) Paid-in capital in excess of par Retained earnings Total stockholders' equity $ 98,000 104,000 209,000 390,000 $801,000 a. Show the effects on the firm of a cash dividend of $0.10 per share. b. Show the effects on the firm of a 1% stock dividend. c. Compare the effects in parts a and b. What are the significant differences between the two methods of paying dividends? Cash versus stock dividend Milwaukee Tool has the following stockholders' equity account. The firm's common stock currently sells for $3.82 per share. Preferred stock Common stock (100,000 shares at $1.04 par) Paid-in capital in excess of par Retained earnings Total stockholders' equity $ 98,000 104,000 209,000 390,000 $801,000 a. Show the effects on the firm of a cash dividend of $0.10 per share. b. Show the effects on the firm of a 1% stock dividend. c. Compare the effects in parts a and b. What are the significant differences between the two methods of paying dividends?