Gilbert Corporation issued a 40-percent stock dividend of its common stock that had a par value of $10 before and after the dividend. At what amount should retained earnings be capitalized for the additional shares issued?

Question

Quizplus · Accepted Answer

The retained earnings should be capitalized for the par value of the additional shares issued in a stock dividend. In this case, the par value remains the same before and after the dividend, so the retained earnings should be capitalized at the par value of $10 per share. Therefore, option B is the best choice.

Gilbert Corporation Issued a 40-Percent Stock Dividend of Its Common