On January 31,2018,Village Bank had 500,000 shares of $2 par value common stock outstanding.On that date,the company declared a 14% stock dividend when the market price of the stock was $37 per share.The immediate effect of this dividend upon Village Bank was:

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The immediate effect of a 14% stock dividend on Village Bank, which had 500,000 shares outstanding, would be a reduction in retained earnings. To calculate the amount, you multiply the number of shares by the dividend percentage and then by the market price per share at the time of the dividend declaration: 500,000 shares * 14% = 70,000 shares. Then, 70,000 shares * $37 market price per share = $2,590,000. This amount is transferred from retained earnings to paid-in capital, reflecting the value of the stock dividend distributed to shareholders.

On January 31,2018,Village Bank Had 500,000 Shares of $2 Par