Xilo Corporation has decided on a 20% stock dividend. If the ﬁrm currently has 900,000 shares outstanding, how many shares will be outstanding after the stock dividend?

Question

Quizplus · Accepted Answer

A 20% stock dividend means that for every 5 shares currently outstanding, an additional share will be distributed. Therefore, for every 1 share, 0.2 additional shares will be distributed. 
If Xilo Corporation currently has 900,000 shares outstanding, then the number of additional shares to be distributed is:
0.2 x 900,000 = 180,000
The total number of shares outstanding after the stock dividend will be:
900,000 + 180,000 = 1,080,000
Therefore, the answer is B, 1,080,000 shares.

Xilo Corporation Has Decided on a 20% Stock Dividend