Answered

Discover a world of knowledge at Westonci.ca, where experts and enthusiasts come together to answer your questions. Join our Q&A platform to connect with experts dedicated to providing precise answers to your questions in different areas. Our platform offers a seamless experience for finding reliable answers from a network of knowledgeable professionals.

Novak Corp. has had 4 years of net income. Due to this success, the market price of its 300,000 shares of $5 par value common stock has increased from $11 per share to $54. During this period, paid-in capital remained the same at $4,290,000. Retained earnings increased from $1,790,000 to $12,900,000. President E. Rife is considering either a 17% stock dividend or a 2-for-1 stock split.
He asks you to show the before-and-after effects of each option on retained earnings.
Retained earnings after stock dividend
Retained earnings after stock split

Sagot :

Tundexi

Answer:

Retained earnings after stock dividend  = $10,146,000

Retained earnings after stock split = $12,900,000

Explanation:

1. Retained earnings after stock dividend amount is: 300,000*17%*54 = $2,754,000. The new balance of retained earnings is = $12,900,000 - $2,754,000 = $10,146,000

2. The retained earning after stock-split will not change and it is same as $12,900,000

Your visit means a lot to us. Don't hesitate to return for more reliable answers to any questions you may have. Thanks for using our platform. We aim to provide accurate and up-to-date answers to all your queries. Come back soon. We're glad you visited Westonci.ca. Return anytime for updated answers from our knowledgeable team.