Question

The stockholders' equity of Oriole Company at July 31, 2021 is presented below: Common stock, par value $20, authorized 400,000 shares; issued and outstanding 159000 shares $3180000 Paid-in capital in excess of par 160000 Retained earnings 646000 $3986000 On August 1, 2021, the board of directors of Oriole declared a 15% stock dividend on common stock, to be distributed on September 15th. The market price of Oriole's common stock was $72 on August 1, 2021, and $78 on September 15, 2021. What is the amount of the debit to retained earnings as a result of the declaration and distribution of this stock dividend

Answer 1

Answer: $1,717,200

Explanation:

The amount of the debit to retained earnings as a result of the declaration and distribution of this stock dividend will be:

= 15% × 159,000 × $72

= 0.15 × 159,000 × $72

= $1,717,200