Problem:
Ziegler's has the following equity account balances: common stock of $42,000 with a $1 par value, capital surplus of $228,000, and retained earnings of $509,000. The stock has a market value of $38 a share.
Required:
Question: Assume the company issues a 20 percent stock dividend. How many shares of stock will the firm distribute as a result of this dividend?
Note: Provide support for rationale.