Question

On March 1, 2019, Baltimore Corporation had 60,000 shares of common stock outstanding with a par value of $5 per share. On March 1, Baltimore Corporation authorized a 20% stock dividend when the market value was $16 per share. Use this information to calculate the amount either (debited) or credited to retained earnings. Enter as a negative number if retained earnings is debited and a positive number if retained earnings is credited.

Answer 1

Answer:

The retained earning would be debited by ($60,000)

Explanation:

According to the given data we have the following:

Number of shares outstanding=60,000

par value of $5 per share

stock dividend declared=cc

Therefore,  to calculate the amount either (debited) or credited to retained earnings we would have to make the followin calculation:

Dividend value=Number of shares outstanding×par value of $5 per share×stock dividend declared

Dividend value=60,000×$5×20%

Dividend value=($60,000)

Therefore, as the dividend paid reduces retained earnings, the retained earning would be debited by ($60,000)