Reference no: EM133019912

Question - Sara Lea Inc. reported the following information on June 30, 2021, prior to the declaration of a 40% stock dividend:

Common stock, $2.50 par value, 1,600,000 shares issued $ 4,000,000

Paid in capital 7,000,000

Retained earnings 9,500,000

Treasury stock, 240,000 shares at cost 2,880,000

Required -

1) What are the stockholder's equity and the Retained Earnings after recording the declaration of the stock dividend?

2) After the distribution of the stock dividend, how many shares of common stock will be issued and outstanding?