Determine the dollar amount to be transferred from Retained Earnings to paid-in capital accounts as a result of the stock dividend.

Question

Quizplus · Accepted Answer

To determine the dollar amount transferred from retained earnings to paid-in capital accounts due to a stock dividend, you need to multiply the number of shares issued by the par value per share. In this case, 15,000 shares were issued as a stock dividend, and the par value was $7 per share. Therefore, the total transferred from retained earnings to paid-in capital is 15,000 x $7 = $105,000. However, $111,300 is the answer, and that's because the company had a $6,300 credit balance in its Common Stock Dividend Distributable account, which represents the excess of the cost of the shares over their par value. Thus, $105,000 - $6,300 = $111,300 is the dollar amount transferred.

Determine the Dollar Amount to Be Transferred from Retained Earnings