97. Indicate the effects on a corporation (increase, decrease or no effect) of the payment of a stock dividend versus the announcement of a stock split on the following financial statement...

97. Indicate the effects on a corporation (increase, decrease or no effect) of the payment of a stock dividend versus the announcement of a stock split on the following financial statement item:


Financial Statement Item
Retained earnings
Number of shares outstanding
Total owner's equity
Share capital - common shares
Cash

98. On July 31, 2014, just prior to year-end, the Board of Directors of Watts and Peppicelli Ltd declared a 5% stock dividend. At the time the dividend was paid the company had 80,000 shares of common stock issued and outstanding. The articles of incorporation indicated that the company was authorized to issue up to 200,000 common shares. At the time the dividend was declared, the book value of the common shares was $20. The shares were issued for an average cost of $23 and had a market value at the date of the stock dividend declaration of $38 per share. Retained earnings amounted to $900,000.



Required:


A) Prepare the entry to record the stock dividend.
B) Prepare the shareholders' equity section of the balance sheet at July 31, 2014, immediately after the payment of the stock dividend.