CBA Inc.has 250,000 shares outstanding.The shares were issued for $14.The stock is currently selling for $34.CBA has $5,000,000 in retained earnings and has declared a stock dividend that will increase the number of outstanding shares by 6%.What will be the common stock account after the stock dividend?

Question

Quizplus · Accepted Answer

The total value of the common stock account before the stock dividend is:
250,000 shares * $14/share = $3,500,000

After the stock dividend, the number of outstanding shares will increase by 6%, or 15,000 shares (250,000 shares * 0.06). The new number of outstanding shares will be 265,000 (250,000 + 15,000).

The total value of the common stock account after the stock dividend is:
265,000 shares * $34/share = $9,010,000

To find out the increase in the common stock account due to the stock dividend, we need to subtract the original value of the common stock account from the new value:
$9,010,000 - $3,500,000 = $5,510,000

However, the question is asking for the common stock account after the dividend, not the increase in value due to the dividend. Therefore, we need to add back the retained earnings to get the final answer:
$5,510,000 + $5,000,000 = $10,510,000

So the correct answer is C) $4,010,000.

CBA IncHas 250,000 Shares Outstanding