What is the amount of retained earnings transferred to paid-in capital accounts (capitalized) for the stock dividend?
Transcribed Image Text:The equity sections for Atticus Group at the beginning of the year (January 1) and end of the year (December 31) follow.
Stockholders' Equity (January 1)
Common stock-$4 par value, 100,000 shares authorized, 40,000 shares issued and
outstanding
Paid-in capital in excess of par value, common stock
Retained earnings
$ 160,000
120,000
320,000
$ 600,000
Total stockholders' equity
Stockholders' Equity (December 31)
Common stock-$4 par value, 100,000 shares authorized, 47,200 shares issued, 4,000
shares in treasury
Paid-in capital in excess of par value, common stock
Retained earnings ($40,000 restricted by treasury stock)
$ 188,800
177,600
420,000
786,400
(40,000)
$ 746,400
Less cost of treasury stock
Total stockholders' equity
The following transactions and events affected its equity during the year.
January 5 Declared a $0.40 per share cash dividend, date of record January 10.
March 20 Purchased treasury stock for cash.
April 5 Declared a $0.40 per share cash dividend, date of record April 10.
July 5 Declared a $0.40 per share cash dividend, date of record July 10.
July 31 Declared a 20% stock dividend when the stock's market value was $12 per share.
August 14 Issued the stock dividend that was declared on July 31.
October 5 Declared a $0.40 per share cash dividend, date of record October 10.
3. What is the amount of retained earnings transferred to paid-in capital accounts (capitalized) for the stock dividend?
Capitalization amount
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Definition Definition Remaining net income of the company after the required dividends are paid to shareholders. This surplus money is usually invested back into the business to expand its business operations or launch a new product.
Expert Solution
Step 1
Solution:-
Given,
Common stock from 1,00,000
shares authorized 40,000 shares issued on Stockholder's Equity (January 1)
shares authorized 47,200 shares issued on Stockholder's Equity (December 31)
