On August 1,2015,Omega Co.declared and issued a 15 percent common stock dividend.Prior to this,Omega Co.had 50,000 outstanding shares of $2 par value common stock.The market value of Omega Co.'s stock was $18 per share at the time the dividend was issued.As a result of this stock dividend,Omega Co.'s total stockholders' equity ________.

Question

Quizplus · Accepted Answer

A stock dividend does not increase or decrease the total stockholders' equity. Instead, it transfers a portion of retained earnings to the common stock account. In this case, Omega Co. issued 7,500 new shares (15% of 50,000), but the total value of the company's assets and liabilities did not change. Therefore, the answer is D - the stock dividend did not change Omega Co.'s total stockholders' equity.