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A company with 103,572 authorized shares of $4 par common stock issued 37,413 shares at $16. subsequently, the company declared a 2% stock dividend on a date when the market price was $33 per share. what is the amount transferred from the retained earnings account to paid-in capital accounts as a result of the stock dividend?

a.$14,400
b.$24,000
c.$33,600
d.$9,600

User TCopple
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Final answer:

The amount transferred from retained earnings to paid-in capital due to a 2% stock dividend when the market price is $33 per share is approximately $24,684, which rounds to the closest given option of $24,000.

Step-by-step explanation:

To determine the amount transferred from the retained earnings to paid-in capital accounts due to a stock dividend, we first need to find out how many shares the 2% stock dividend represents and then calculate the total value based on the given market price.

The company issued 37,413 shares, so a 2% stock dividend would be 2% of 37,413, equaling approximately 748 shares (rounded to the nearest whole number, as shares can't be fractional). On the date the dividend was declared, the market price was $33 per share. Thus, the value of the stock dividend is 748 shares times the market price of $33, which equals $24,684.

This amount, $24,684, is transferred from retained earnings to the paid-in capital accounts as a result of issuing the stock dividend. However, since the options available are rounded numbers, we look for the closest option which is $24,000.

User Michael Krebs
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