1. Stock Dividends. The owners' equity account ts for Trans World International are shown here:
Common stock ($1 par value) $30,000
Capital surplus 185,000
Retained earnings 610,000
Total owners' equity $825,000
a. If Trans World stock currently sells for $42 per share and a 10 percent stock dividend is declared, how many new shares will be distributed? Show how the equity accounts would change.
b. If Trans World declared a 25 percent stock dividend, how would the accounts change?