A company with 100,000 authorized shares of $4 par common stock issued 40,000 shares at $8. Subsequently, the company declared a

Question

3 years ago

9

A company with 100,000 authorized shares of $4 par common stock issued 40,000 shares at $8. Subsequently, the company declared a

2% stock dividend on a date when the market price was $11 a share. What is the amount transferred from the retained earnings account to paid-in capital accounts as a result of the stock dividend

Business

1 answer:

zvonat [6] · Answer 1 · 2022-06-27T13:36:35+03:00

Answer:

$8,800

Explanation:

Stock dividend is a type of dividend which is paid in the form of additional shares in the company. It is declared as a ratio or percentage of outstanding shareholding in the company.

Stock Dividend = Numbers of outstanding shares x Stock Dividend percentage

Stock Dividend = 40,000 x 2% = 800 shares

Amount ot be transferred = 800 x $11 = $8,800