CarWorks Company has 100,000 authorized shares of $4 par common stock.The company issued 40,000 shares at $8.Subsequently, CarWorks declared a 2% stock dividend on a date when the market price was $11 a share.What is the amount transferred from the retained earnings account to paid-in capital accounts as a result of the stock dividend?

Question

Quizplus · Accepted Answer

The stock dividend is 2% of 40,000 shares, which is 800 shares. The market price at the time of the dividend is $11 per share. Therefore, the amount transferred from retained earnings to paid-in capital is 800 shares * $11 = $8,800.

CarWorks Company Has 100,000 Authorized Shares of $4 Par Common