Question - SpaceCo declared and distributed a 20% stock dividend on 5 million, $1 par value, common shares. The market value on the declaration date was $30 per share.
Required:
1) Show the entry for this dividend and
2) Show the entry necessary if this were instead a 100% stock dividend.
3) Does total OE change as a result of these entries?
4) Does any particular shareholder own a higher % of shares immediately following the dividend?
5) Why is this called "capitalizing" retained earnings?