Bridge Corporation issued a 15% stock dividend on 20,000 outstanding shares of $

Question

Bridge Corporation issued a 15% stock dividend on 20,000 outstanding shares of $10 stated value common stock. The distribution was made at the time the market value of the stock was $50 a share. How did this transaction affect the company's total stockholders' equity?

The total balances in equity accounts increased by $150,000.

The sum of the balances in equity accounts increased by $30,000.

The sum of the balances in equity accounts decreased by $150,000.

Total stockholders' equity was not affected by this transaction.

Explanation / Answer

Issue of stock dividends does not affect the total stockholders' equity. Therefore, the total stockholders' equity was not affected by this transaction.

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