Ducheyne Electric recently declared a 15 percent stock dividend.On the date of the stock dividend Ducheyne had 16 million shares outstanding priced at $46 per share in the market.An accounting entry was required on the balance sheet transferring some retained earnings to the common stock account.If retained earnings were $280 million prior to the transaction,what was the dollar amount of retained earnings after the transfer?
A) $280.0 million
B) $110.4 million
C) $234.0 million
D) $277.6 million
E) $169.6 million

Question

Quizplus · Accepted Answer

The stock dividend is 15% of 16 million shares, which is 2.4 million shares. The market price is $46 per share, so the total value of the dividend is 2.4 million shares * $46 = $110.4 million. Retained earnings after the transfer is $280 million - $110.4 million = $169.6 million.

Ducheyne Electric Recently Declared a 15 Percent Stock Dividend