The stockholders' equity section of Lawton Corporation as of December 31, 2007, was as follows:
On March 1, 2008, the board of directors declared a 15% stock dividend, and accordingly 1,500 additional shares were issued. On March 1, 2008, the fair market value of the stock was $6 per share. For the two months ended February 28, 2008, Lawton sustained a net
Loss of $10,000. What amount should Lawton report as retained earnings as of March 1, 2008?

Question

The stockholders' equity section of Lawton Corporation as of December 31, 2007, was as follows:
 On March 1, 2008, the board of directors declared a 15% stock dividend, and accordingly 1,500 additional shares were issued. On March 1, 2008, the fair market value of the stock was $6 per share. For the two months ended February 28, 2008, Lawton sustained a net
Loss of $10,000. What amount should Lawton report as retained earnings as of March 1, 2008?

Quizplus · Accepted Answer

$75,000 - $10,000 - (1,500 × $6) = $56,000.

The Stockholders' Equity Section of Lawton Corporation as of December