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