The owner of 100 shares of stock of a corporation with 2,000 shares of stock outstanding has a 5% interest in the total stockholders' equity. If a 20% stock dividend is declared and distributed a 5% interest in the total stockholders' equity prior to the stock dividend, would have which of the following interests in the equity after the stock dividend was distributed?

Question

Quizplus · Accepted Answer

A stock dividend increases the number of shares outstanding but does not change the proportionate ownership. Therefore, the owner's interest remains at 5% after the stock dividend.

The Owner of 100 Shares of Stock of a Corporation