(Stock Dividends and Splits) The directors of Merchant Corporation are considering the issuance of a stock dividend. They have asked you to discuss the proposed action by answering the following questions.Instructions(a) What is a stock dividend? How is a stock dividend distinguished from a stock split (1) from a legal standpoint, and(2) from an accounting standpoint?(b) For what reasons does a corporation usually declare a stock dividend? A stock split?(c) Discuss the amount, if any, of retained earnings to be capitalized in connection with a stock dividend.

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