Crane Inc. has retained earnings of $810000 and total stockholders’ equity of $2
ID: 2411918 • Letter: C
Question
Crane Inc. has retained earnings of $810000 and total stockholders’ equity of $2040000. It has 307000 shares of $5 par value common stock outstanding, which is currently selling for $28 per share. If Crane declares a 9% stock dividend on its common stock:
A- retained earnings will decrease by $138150 and total stockholders’ equity will increase by $138150.
B- retained earnings will decrease by $773640 and total stockholders’ equity will increase by $773640.
C- net income will decrease by $138150.
D- retained earnings will decrease by $773640 and total paid-in capital will increase by $773640.
Explanation / Answer
D. retained earnings will decrease by $773,640 and total paid-in capital will increase by $773,640.
If Crane declares a 9% stock dividend on its common stock retained earnings will decrease and total paid-in capital will increase by:
= 307,000 * $28 * 0.09
= $773,640