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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

    © BrainMass Inc. brainmass.com June 3, 2020, 7:54 pm ad1c9bdddf
    https://brainmass.com/business/finance/retained-earnings-116193

    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

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