Gonzalez Company has 350,000 shares of $10 par value common stock outstanding. During the year, Gonzalez declared a 10% stock dividend when the market price of the stock was $30 per share. Four months later Gonzalez declared a $.50 per share cash dividend. As a result of the dividends declared during the year, retained earnings decreased by
A) $1,242,500.
B) $525,000.
C) $192,500.
D) $175,000.

Question

Quizplus · Accepted Answer

350,000 × .10 × $30 = $1,050,000
$1,050,000 + (350,000 × 1.10 × $.50) = $1,242,500.

Gonzalez Company Has 350,000 Shares of $10 Par Value Common