On May 1, 2020, when the market value of Jay Ltd.'s common shares was $ 15 per share, the corporation had 100,000 no par value common shares issued and outstanding. On this day, Jay declared and issued a 15% common stock dividend. As a result of this stock dividend, Jay's total shareholders' equity
A) increased by $ 225,000.
B) decreased by $ 225,000.
C) decreased by $ 15,000.
D) did not change.

Question

Quizplus · Accepted Answer

The issuance of a stock dividend does not change the total shareholders' equity since it only redistributes the ownership interest among the existing shareholders. In other words, the total value of the shares remains the same even though the number of shares outstanding has increased. Therefore, the answer is D - there was no change in the total shareholders' equity.

On May 1, 2020, When the Market Value of Jay