On October 1, 2013, Chief Corporation declared and issued a 14% stock dividend.

Question

On October 1, 2013, Chief Corporation declared and issued a 14% stock dividend. Before this date, Chief had 89,000 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:

On October 1, 2013, Chief Corporation declared and issued a 14% stock dividend. Before this date, Chief had 89,000 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

Chief's retained earnings will decrease by = Total market Value * Stock Dividend%

Chief's retained earnings will decrease by = (89000*10)*14%

Chief's retained earnings will decrease by = $ 124,600

Answer

d) Decrease by $124,600.

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