Citigroup with the equity accounts shown below has declared a 15% stock dividend when the market value of its equity is 30 per share.

(a) What effects on the equity accounts will the distribution of the stock dividend have?

(b) Suppose Citigroup instead decides on a five-for-two stock split. What effect does this have on the equity accounts?

500,000 Ordinary Shares (1 per share) Capital Surplus Retained earnings 2,250,000 3,500,000 Total owners' equity 6,250,000