MC Qu. 73 LO 18-08 On October 1, 2013, Chief Corporation declared and issued a..
ID: 2500874 • Letter: M
Question
MC Qu. 73 LO 18-08 On October 1, 2013, Chief Corporation declared and issued a...
On October 1, 2013, Chief Corporation declared and issued a 11% stock dividend. Before this date, Chief had 79,000 shares of $5 par common stock outstanding. The market value of Chief Corporation on the date of declaration was $10 per share. As a result of this dividend, Chief's retained earnings will:
Decrease by $87,400.
Not change.
Decrease by $86,900.
Increase by $86,900.
On October 1, 2013, Chief Corporation declared and issued a 11% stock dividend. Before this date, Chief had 79,000 shares of $5 par common stock outstanding. The market value of Chief Corporation on the date of declaration was $10 per share. As a result of this dividend, Chief's retained earnings will:
Explanation / Answer
Retained earning will decrease by - $86,900 (i.e. 79,000*$10*11%=$86,900)
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