Retained Earnings
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Please help with the following problem.
On December 31, 2005 the stockholders' equity section of Mercedes Corporation was as follows:
Common stock ($5 par value); authorized 30,000
Shares, issued and outstanding 9,000 shares $45,000
Additional paid-in capital 58,000
Retained earnings 73,000
Total stockholders' equity $176,000
On March 1, 2006 the board of directors declared a 10% stock dividend and accordingly, 900 additional shares were issued. The fair value of the stock at that time was $8 per share. For the three months ended march 31, 2006 Mercedes sustained a net loss of $16,000.
Required:
What amount should the company report as retained earnings on its quarterly financial statement dated march 31, 2006?
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Solution Summary
The solution explains how to calculate the ending retained earnings amount. Step by step calculations are given for each problem.
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Opening retained earnings are 73,000
900 new shares were issued. The market price was $8. The total amount transferred ...
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