On December 31, 2007, the stockholders' equity section of Clark, Inc., was as follows:
On March 31, 2008, Clark declared a 10% stock dividend, and accordingly 900 additional shares were issued, when the fair market value of the stock was $18 per share. For the three months ended March 31, 2008, Clark sustained a net loss of $32,000. The balance of Clark's retained earnings as of March 31, 2008, should be
A) $125,800.
B) $133,000.
C) $134,800.
D) $142,000.

Question

On December 31, 2007, the stockholders' equity section of Clark, Inc., was as follows: 
On March 31, 2008, Clark declared a 10% stock dividend, and accordingly 900 additional shares were issued, when the fair market value of the stock was $18 per share. For the three months ended March 31, 2008, Clark sustained a net loss of $32,000. The balance of Clark's retained earnings as of March 31, 2008, should be
A) $125,800. 
B) $133,000. 
C) $134,800. 
D) $142,000.

Quizplus · Accepted Answer

$174,000 - $32,000 - (900 × $18) = $125,800.

On December 31, 2007, the Stockholders' Equity Section of Clark