Question

Murphy's has shares of stock outstanding with a par value of $1 per share and a market value of $24.60 per share. The balance sheet shows $32,500 in the capital in excess of par account, $12,000 in the common stock account, and $68,700 in the retained earnings account. The firm just announced a 10 percent stock dividend. What will the balance be in the retained earnings account after the dividend

Answer 1

$39,180

Step-by-step explanation:

The computation of the retained earning is shown below:

= Stock dividend percentage × common stock shares × market value per share × - par value per share + balance in retained earning account

= 10 % × 12,000 shares × $ 24.6 × -$1 + $ 68,700

= - $29,520 + $68,700

= $39,180

We simply applied the above formula so that the balance in the retained earning could come