× A 10% stock dividend will increase the number of shares issued by 12800 (128000 × 10%). At a market price of $30 per share, total paid-in capital will increase by $384000 (12800 shares × $30/share) and retained earnings will decrease by that same amount. Grouper Inc. has retained earnings of $509000 and total stockholders' equity of $2001000. It has 128000 shares of $8 par value common stock outstanding, which is currently selling for $30 per share. What will occur if Grouper declares a 10% stock dividend on its common stock? Retained earnings will decrease by $102400 and total stockholders' equity will increase by $102400. Net income will decrease by $102400. Retained earnings will decrease by $384000 and total paid-in capital will increase by $384000. Retained earnings will decrease by $384000 and total stockholders' equity will increase by $384000.
× A 10% stock dividend will increase the number of shares issued by 12800 (128000 × 10%). At a market price of $30 per share, total paid-in capital will increase by $384000 (12800 shares × $30/share) and retained earnings will decrease by that same amount. Grouper Inc. has retained earnings of $509000 and total stockholders' equity of $2001000. It has 128000 shares of $8 par value common stock outstanding, which is currently selling for $30 per share. What will occur if Grouper declares a 10% stock dividend on its common stock? Retained earnings will decrease by $102400 and total stockholders' equity will increase by $102400. Net income will decrease by $102400. Retained earnings will decrease by $384000 and total paid-in capital will increase by $384000. Retained earnings will decrease by $384000 and total stockholders' equity will increase by $384000.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:× A 10% stock dividend will increase the number of shares issued by 12800 (128000 × 10%). At a market price of $30 per
share, total paid-in capital will increase by $384000 (12800 shares × $30/share) and retained earnings will decrease by that
same amount.
Grouper Inc. has retained earnings of $509000 and total stockholders' equity of $2001000. It has 128000 shares of $8 par value
common stock outstanding, which is currently selling for $30 per share. What will occur if Grouper declares a 10% stock dividend on
its common stock?
Retained earnings will decrease by $102400 and total stockholders' equity will increase by $102400.
Net income will decrease by $102400.
Retained earnings will decrease by $384000 and total paid-in capital will increase by $384000.
Retained earnings will decrease by $384000 and total stockholders' equity will increase by $384000.
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