Reference no: EM132758236

At the beginning of the year, the shareholders' equity section of the statement of financial position of R & B Corporation reflected the following:

Common shares (no par value, authorized 79,000 shares, outstanding 39,500 shares) $474,000
Contributed surplus $21,500
Retained earnings $184,500
Accumulated other comprehensive income $37,500

On February 1, the board of directors declared a 16 percent stock dividend to be issued on April 30. The market value per share was $18 on the declaration date.

Problem 1. For comparative purposes, prepare the shareholders' equity section of the statement of financial position (a) before the stock dividend and (b) after the stock dividend.

Problem 2. Determine the effects of this stock dividend on the company's assets, liabilities, and shareholders' equity.