Qdot International originally issued 50,000 shares of common stock at a price of $20 per share. A year later, they distributed a 10% stock dividend to shareholders. At the time of the stock dividend, the share price had gone up to $24 per share. Which of the following statements is TRUE?

Question

Quizplus · Accepted Answer

Stock dividends do not result in sales revenue, gains, or losses for the company. They simply redistribute the company's equity to existing shareholders by issuing additional shares, in this case, 10% of the existing 50,000 shares, without any cash transaction involved.

Qdot International Originally Issued 50,000 Shares of Common Stock at a Price