Surf City Inc.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 split?

Question

Quizplus · Accepted Answer

A 20% stock dividend means that for every 5 shares currently outstanding, an additional share will be issued. Therefore, the number of new shares issued will be:

900,000 shares x 0.2 = 180,000 shares

The total number of outstanding shares after the stock split will be:

900,000 + 180,000 = 1,080,000 shares