The Stockholders' Equity Section of the Balance Sheet for Scuba

Short Answer

The Stockholders' Equity section of the balance sheet for Scuba Gear Corporation appeared as follows before its recent stock dividend:
$\begin{array}{lr}\text { Common stock, } \$ 5 \text { par, } 100,000 \text { shares issued and outstanding } & \$ 500,000 \\\text { Additional paid-in capital } & 100,000 \\\text { Retained earnings } & 725,000 \\\text { Total stockholders' equity } & \$ 1,325,000 \\\hline\end{array}$ Scuba Gear declared a 10% stock dividend when the market price per share was $8.After the stock dividend was distributed,the components of the stockholders' equity section were:
$\begin{array}{ccc} \text { Common Stock } & \text { Additional Paid-In Capital } & \text { Retained Earning } \end{array}$

a. $\begin{array}{ccc}& \$ 580,000 &&&&&& \$ 100,000 &&&&&& \$ 645,000 \\\end{array}$

b. $\begin{array}{ccc}&\$ 550,000 &&&&&& \$ 100,000 &&&&&& \$ 675,000 \\\end{array}$

c. $\begin{array}{ccc}& \$ 550,000 &&&&&& \$ 130,000 &&&&&& \$ 645,000 \\\end{array}$

d. There would be no change in the components of stockholders' equity.