A company with 100,000 authorized shares of $4 par common stock issued 40,000 shares at $8. Subsequently, the company declared a 4% stock dividend on a date when the market price was $12 per share. What is the amount transferred from the retained earnings account to paid-in capital accounts as a result of the stock dividend?

Question

Quizplus · Accepted Answer

The amount transferred from retained earnings to paid-in capital for a 4% stock dividend on 40,000 shares (which is 1,600 shares, as 4% of 40,000) at a market price of $12 per share is calculated as 1,600 shares * $12 = $19,200.

A Company with 100,000 Authorized Shares of $4 Par Common