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    Dividends and retained earnings

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    Gonzalez Company has 350,000 shares of $10 par value common stock outstanding. During the year, Gonzalez declared a 10% stock dividend when the market price of the stock was $30 per share. Four months later Gonzalez declared a $.50 per share cash dividend. As a result of the dividends declared during the year, retained earnings decreased by how much?

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    Solution Preview

    Stock Dividend - The number of shares issued is 350,000X10%=35,000. The retained earnings would ...

    Solution Summary

    The solution explains the impact on retained earnings due to dividend declaration.