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A company with 100,000 authorized shares of $4 par common stock issued 40,000 shares at $8. Subsequently, the company declared a 4% stock dividend on a date when the market price was $12 a share. What is the amount transferred from the retained earnings account to paid-in capital accounts as a result of the stock dividend?

Respuesta :

Answer:

$ 19200

Explanation:

Given:

Total stocks issued = 40000

Declared stock dividend = 4%

Market price of the share on the day of dividend = $ 12

Thus, stocks declared to the dividend = 4% of total issued shares

or

stocks declared to the dividend = 0.04 × 40000 = 1600

Now, the market price of the 1600 shares = 1600 × $ 12

or

the market price of the 1600 shares = $ 19200

hence, the total amount transferred is $ 19200

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