What will be the impact on the firm''s equity accounts

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Reference no: EM13927237

The Sweet Times Candy Company has the following equity accounts on its balance sheet:

Common stock ($1 par, 500,000 shares)	$ 500,000
Contributed capital in excess of par	2,000,000
Retained earnings	13,000,000
Total common stockholders' equity	$15,500,000

The current market price of the firm's shares is $50.

a. If the firm declares a 10 percent stock dividend, what will be the impact on the firm's equity accounts?

b. If the firm currently pays no cash dividend, what is the impact of a 10 percent stock dividend on the wealth position of the firm's existing stockholders?

c. If the firm currently pays a cash dividend of $1 per share and this per-share dividend rate does not change after the 10 percent stock dividend, what impact would you expect the stock dividend to have on the wealth position of existing shareholders?

Reference no: EM13927237

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