On June 30, 2014, Stephans Company showed the following data on the equity section of their balance sheet:
On July 1, 2014, Stephans distributed a 5% stock dividend. The market value of the stock at that time was $13 per share. Following this transaction, the number of shares authorized would stay the same, but the number of shares issued would go up by 5%.

Question

On June 30, 2014, Stephans Company showed the following data on the equity section of their balance sheet:
  On July 1, 2014, Stephans distributed a 5% stock dividend. The market value of the stock at that time was $13 per share. Following this transaction, the number of shares authorized would stay the same, but the number of shares issued would go up by 5%.

Quizplus · Accepted Answer

A stock dividend does not change the authorized shares, only the issued shares increase. Also, the market value of the stock is relevant information for the transaction.

On June 30, 2014, Stephans Company Showed the Following Data