On January 1, 2021, Dodd, Inc., declared a 10% stock dividend on its common stock when the fair value of the common stock was $30 per share. Stockholders' equity before the stock dividend was declared consisted of: Common stock, $10 par value, authorized 200,000 shares; issued and outstanding 120,000 shares $1,200,000 Additional paid-in capital on common stock 150,000 Retained earnings 700,000 Total stockholders' equity $2,050,000 What was the effect on Dodd's retained earnings as a result of the above transaction? a. $300,000 decrease b. $180,000 decrease c. $360,000 decrease d. $600,000 decrease
On January 1, 2021, Dodd, Inc., declared a 10% stock dividend on its common stock when the fair value of the common stock was $30 per share. Stockholders' equity before the stock dividend was declared consisted of: Common stock, $10 par value, authorized 200,000 shares; issued and outstanding 120,000 shares $1,200,000 Additional paid-in capital on common stock 150,000 Retained earnings 700,000 Total stockholders' equity $2,050,000 What was the effect on Dodd's retained earnings as a result of the above transaction? a. $300,000 decrease b. $180,000 decrease c. $360,000 decrease d. $600,000 decrease
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 1, 2021, Dodd, Inc., declared a 10% stock dividend on its common stock when the fair value of the common stock was $30 per share.
Common stock, $10 par value, authorized 200,000 shares;
| | issued and outstanding 120,000 shares | $1,200,000 |
| Additional paid-in capital on common stock | 150,000 |
| 700,000 |
| Total stockholders' equity | $2,050,000 |
What was the effect on Dodd's retained earnings as a result of the above transaction?
a. $300,000 decrease
b. $180,000 decrease
c. $360,000 decrease
d. $600,000 decrease
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