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Boxer Company owned 24,000 shares of King Company that were purchased in 2019 for $350,000. On May 1, 2021, Boxer declared a property dividend of 1 share of King for every 10 shares of Boxer stock. On that date, there were 46,000 shares of Boxer stock outstanding. The market price of the King stock was $20 per share on the date of declaration and $39 per share on the date of distribution. By how much is retained earnings reduced by the property dividend

Sagot :

abiolataiwo2015

Answer:

$92,000

Explanation:

Calculation for By how much is retained earnings reduced by the property dividend

Using this formula

Reduction in Retained earnings=(Boxer stock outstanding/Declared property dividend )×King stock market price)

Let plug in the formula

Reduction in Retained earnings=(46,000/10 shares ) x $20

Reduction in Retained earnings= $92,000

Therefore By how much is retained earnings reduced by the property dividend is $92,000

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