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# Retained earnings account balance after the stock dividend

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Assume a firm has declared a 20% stock dividend on its 1 million shares of outstanding \$5 par value common stock. If the market value of the stock at the date of the stock dividend is \$14 per share and the retained earnings account balance before the stock dividend was \$7,600,000, what is the retained earnings account balance after the stock dividend?

a.
\$3,600,000
b.
\$1,960,240
c.
\$7,600,000
d.
\$4,800,000

#### Solution Preview

The correct answer is (d) 4,800,000. Here is the rationale:

The company issued a 20% stock dividend. 20% of 1,000,000 = ...

#### Solution Summary

The solution answers a multiple choice question related to retained earnings and provides full explanations for the question asked.

\$2.49