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# Retained Earnings

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Omega Sports has the following equity accounts on its balance sheet:

Common stock (\$.50 par, 900,000 shares)
\$ 450,000

Paid in excess
5,580,000

Retained earnings
21,204,000

Total common stockholders' equity
\$27,234,000

The current market price of the firm's shares is \$20. If the firm declares a 10 percent stock dividend followed by a cash dividend of \$0.10 per share, the retained earnings account would change to

a.
\$21,060,000

b.
\$19,305,000

c.
\$25,335,000

d.
\$19,404,000

Please show step by steps instruction

#### Solution Preview

The correct answer is 19,305,000. Here is the explanation:

When the company issued a 10% stock divided, it issues 10% of 900,000 = 90,000 extra shares. The market value is 20 per ...

#### Solution Summary

The solution solves some multiple choice questions related to retained earnings and provides full explanations for the questions asked.

\$2.19