Question

On October 1, 2021, Chief Corporation declared and issued a 14% stock dividend. Before this date, Chief had 86,000 shares of $5 par common stock outstanding. The market price of Chief Corporation on the date of declaration was $10 per share. As a result of this dividend, Chief's retained earnings will:

Answer 1

Answer:

Decreased by $120,400

Explanation:

Calculation for the Chief's retained earnings

RETAINED EARNING

Share issued 86,000 shares

Stock dividend 14% $12,040

(14%*86,000)

*Market price of stock $10

=Amount to be transferred from retained earning $120,400

(12,040*10)

Therefore As a result of this dividend, Chief's retained earnings will:Decreased by $120,400