Dube Electric recently declared a 15 percent share dividend.On the date of the share dividend Dube had 16 million shares outstanding priced at R46 per share in the market.An accounting entry was required on the statement of financial position transferring some retained earnings to the ordinary equity account.If retained earnings was R280 million prior to the transaction, what was the rand amount of retained earnings after the transfer?

Question

Quizplus · Accepted Answer

The share dividend is 15% of 16 million shares, which is 2.4 million shares. The market price is R46 per share, so the total value transferred from retained earnings is 2.4 million * R46 = R110.4 million. Retained earnings after the transfer is R280 million - R110.4 million = R169.6 million.

Dube Electric Recently Declared a 15 Percent Share Dividend