Zealot Inc. has retained earnings of ($ 500,000) and total stockholders' equity of ($ 2,000,000). It has
Question:
Zealot Inc. has retained earnings of \(\$ 500,000\) and total stockholders' equity of \(\$ 2,000,000\). It has 100,000 shares of \(\$ 8\) par value common stock outstanding, which is currently selling for \(\$ 30\) per share. If Zealot declares a \(10 \%\) stock dividend on its common stock:
a. net income will decrease by \(\$ 80,000\).
b. retained earnings will decrease by \(\$ 80,000\) and total stockholders' equity will increase by \(\$ 80,000\).
c. retained earnings will decrease by \(\$ 300,000\) and total stockholders' equity will increase by \(\$ 300,000\).
d. retained earnings will decrease by \(\$ 300,000\) and total paidin capital will increase by \(\$ 300,000\).
Step by Step Answer:
d A 10 stock dividend on the companys common stock will increase ...View the full answer
Financial Accounting Tools For Business Decision Making
ISBN: 9781119791089
10th Edition
Authors: Paul D. Kimmel, Jerry J. Weygandt, Jill E. Mitchell
