Questions
Single choice
A company with 100,000 authorized shares of $4 par common stock issued 40,000 shares at $8. Subsequently, the company declared a 4% stock dividend on a date when the market price was $12 per share. What is the amount transferred from the retained earnings account to paid-in capital accounts as a result of the stock dividend?
Options
A.$48,800
B.$32,000
C.$12,800
D.$19,200
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Step-by-Step Analysis
To analyze this stock dividend scenario, I’ll break down the key details and then evaluate each option.
First, note that the company has 40,000 shares issued. A 4% stock dividend on 40,000 shares means 0.04 × 40,000 = 1,600 new shares will be issued.
Next, determine the accounting effect. A stock dividend is issued at mark......Login to view full explanationLog in for full answers
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