The current stockholder's equity of Interwood Corporation, a distributor of prefabricated wardrobes, is as shown in the following accounts.

Account Amount

Preferred stock $300,000

Common stock (120,000 shares at $4 par) $480,000

Paid-in capital in excess of par $600,000

Retained earnings $720,000

Total stockholder's equity $2,100,000

Interwood, which has 120,000 shares outstanding, declares 15% stock dividend, when the market price of its stock is $14 per share.

Required:

A) Calculate and show the position of each account after issuance of stock dividend.

B) Will the total stockholders' equity be affected by issuance of stock dividend? Support your answer with reasons.