What will happen to retained earnings when a corporation issues 1,000 shares of $1 par stock for $10 per share?
A)it will increase by $1,000.
B)it will increase by $9,000.
C)it will decrease by $9,000.
D)it will remain unchanged.

Question

Quizplus · Accepted Answer

Retained earnings are the cumulative profits that a company has not paid out as dividends. The issuance of new shares of stock does not affect retained earnings directly. It only increases the company's equity (common stock) by the total amount raised from the sale of the new shares. Therefore, retained earnings will remain unchanged.

What Will Happen to Retained Earnings When a Corporation Issues