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# Retained Earnings Balance after Dividend; Market Price

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10) Murphy's, Inc. has 10,000 shares of stock outstanding with a par value of \$1.00 per share. The market value is \$8 per share. The balance sheet shows \$32,500 in the capital in excess of par account, \$10,000 in the common stock account, and \$42,700 in the retained earnings account. The firm just announced a 10% (small) stock dividend.

a) What will the balance in the retained earnings account be after the dividend?
b) What will the market price per share be after the dividend?

#### Solution Preview

Murphy's, Inc. has 10,000 shares of stock outstanding with a par value of \$1.00 per share. The market value is \$8 per share. The balance sheet shows \$32,500 in
the capital in excess of par account, \$10,000 in the common stock account, and \$42,700 in the retained earnings account. The ...

#### Solution Summary

This solution illustrates how to compute the balance in retained earnings after a stock dividend has been declared and paid, and the effect of that dividend on the market price per share.

\$2.19
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