On December 31, 2019, Shoreline Hotel Inc.., reported its shareholders' equity as follows: Common shares, no par value, authorized 200,000 shares issued and outstanding 120,000 shares $1,350,000 Retained earnings 700,000 Total shareholders' equity $2,050,000 On January 1, 2020, it declared a 10% stock dividend on its common shares when the market value of the common shares was $22 per share before market adjustment (ie: prior to ex-dividend value). What was the effect on Shoreline’s retained earnings as a result of the above transaction? Select one: a. $264,000 decrease . b. $135,000 decrease . c. $400,000 increase. d. $240,000 increase. e. None of the above answers.
On December 31, 2019, Shoreline Hotel Inc.., reported its shareholders' equity as follows: Common shares, no par value, authorized 200,000 shares issued and outstanding 120,000 shares $1,350,000 Retained earnings 700,000 Total shareholders' equity $2,050,000 On January 1, 2020, it declared a 10% stock dividend on its common shares when the market value of the common shares was $22 per share before market adjustment (ie: prior to ex-dividend value). What was the effect on Shoreline’s retained earnings as a result of the above transaction? Select one: a. $264,000 decrease . b. $135,000 decrease . c. $400,000 increase. d. $240,000 increase. e. None of the above answers.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On December 31, 2019, Shoreline Hotel Inc.., reported its shareholders' equity as follows:
Common shares, no par value, authorized 200,000 shares
issued and outstanding 120,000 shares $1,350,000
Total shareholders' equity $2,050,000
On January 1, 2020, it declared a 10% stock dividend on its common shares when the market value of the common shares was $22 per share before market adjustment (ie: prior to ex-dividend value).
What was the effect on Shoreline’s retained earnings as a result of the above transaction?
Select one:
a.
$264,000 decrease .
b.
$135,000 decrease .
c.
$400,000 increase.
d.
$240,000 increase.
e.
None of the above answers.
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