Omega Sports has the following equity accounts on its balance sheet:
The current market price of the firm's shares is $20. If the firm declares a 10 percent stock dividend and a cash dividend of $0.10 per share, the retained earning account would change to ____.
A) $21,060,000
B) $19,305,000
C) $25,335,000
D) $19,404,000

Question

Omega Sports has the following equity accounts on its balance sheet: 
The current market price of the firm's shares is $20. If the firm declares a 10 percent stock dividend and a cash dividend of $0.10 per share, the retained earning account would change to ____.
A) $21,060,000 
B) $19,305,000 
C) $25,335,000 
D) $19,404,000

Quizplus · Accepted Answer

Solution:
RE = $21,204,000 - 90,000($20) - 990,000($0.10)
= $19,305,000

Omega Sports Has the Following Equity Accounts on Its Balance