Stock dividend: Firm Columbia Paper has the following stockholders' equity account. The firm's common stock has a current market price of $30 per share.

Preferred stock                                                                                     $100,000

Common stock (10,000 shares at $2 par)                20,000

Paid-in capital in excess of par                                                                 280,000

Retained earnings                                                                                   100,000

Total stockholders' equity                                                                       $500,000

Required:

a. Show the effects on Columbia of a 5% stock dividend.

b. Show the effects of (1) a 10% and (2) a 20% stock dividend.

c. In light of your answers to parts aand b, discuss the effects of stock dividends on stockholders' equity.