Question

A company with 82,146 authorized shares of $5 par common stock issued 31,717 shares at $14 per share. Subsequently, the company declared a 2% stock dividend on a date when the market price was $26 a share. What is the amount transferred from the retained earnings account to paid-in capital accounts as a result of the stock dividend

Answer 1

$16,492.84

Step-by-step explanation:

Calculation to determine the amount transferred from the retained earnings account to paid-in capital accounts as a result of the stock dividend

Amount transferred to Paid-in capital accounts=(Common stock*Stock dividend declared percentage)*Market price

Let plug in the formula

Amount transferred to Paid-in capital accounts=(31,717 shares*2%)*$26 per share

Amount transferred to Paid-in capital accounts=634.34*$26 per share

Amount transferred to Paid-in capital accounts=$16,492.84

Therefore the amount transferred from the retained earnings account to paid-in capital accounts as a result of the stock dividend is $16,492.84