Alpha Co. is paying a $.64 per share dividend today. There are 158,000 shares outstanding with a par value of $1 per share. As a

Question

3 years ago

6

Alpha Co. is paying a $.64 per share dividend today. There are 158,000 shares outstanding with a par value of $1 per share. As a

result of this dividend, the: A) common stock account will decrease by $138,000 B) capital in excess of par value account will decrease by $101,120 C) retained earnings will decrease by $101,120. D) retained earnings will decrease by $99,360. E) common stock account will decrease by $101,120.

Business

1 answer:

muminat · Answer 1 · 2022-07-15T04:47:30+03:00

Answer:

Dividend paid = $0.64 x 158,000 = $101,120. The dividend paid reduces retained earnings by $101,120.

The correct answer is C

Explanation:

Dividend is paid out of profit after tax. This reduces the retained earnings of the company since dividend involves outflow of cash.