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

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

Ordinary shares (1 per share) 500,000
Capital Surplus 2,250,000
Retained Earnings 3,500,000

Total owners' equity 6,250,000

(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?

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