How would the declaration and subsequent issuance of a 10 percent stock dividend by the issuer affect each of the following when the market value of the shares exceeds the par value of the stock? Common Stock Additional Paid-in Capital
A) No effect No effect
B) No effect Increase
C) Increase No effect
D) Increase Increase

Question

Quizplus · Accepted Answer

When a company issues a 10 percent stock dividend, it distributes additional shares to shareholders, which increases the Common Stock account by the par value of the shares issued. The excess of the market value over the par value is recorded in the Additional Paid-in Capital account, thus both accounts increase.

How Would the Declaration and Subsequent Issuance of a 10