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 a share. What is the amount transferred from the retained earnings account to paid-in capital accounts as a result of the stock dividend?
A) $12,800
B) $19,200
C) $32,000
D) $48,800

Question

Quizplus · Accepted Answer

Amount transferred from the retained earnings account to paid-in capital accounts = Number of shares issued as stock dividends × Market price of each share at the time of issue = 4% × 40,000 × $12 = $19,200

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