Zippy Company plans to issue a 10% stock dividend. Here are some details: Current number of...
Zippy Company plans to issue a 10% stock dividend. Here are some details:
Current number of shares outstanding, 10,000
Par value $2.00
Current market price, $30
What will happen to retained earnings after the stock dividend is paid?
Group of answer choices
Retained earnings will decrease by $30,000.
Retained earnings will increase by $30,000.
Retained earnings will decrease by $300,000
Retained earnings will increase by $2,000.
Homework Answers
When dividend is paid , it reduces the retained earnings.
When a stock dividend is declared, the total amount to be debited from retained earnings is calculated by multiplying the current market price per share by the dividend percentage and by the number of shares outstanding.
Stock dividend = 30 × 10% × 10,000 = $ 30,000
Retained earnings will decrease by $ 30,000.
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