The stockholders\' equity section of Milroy Corporation as of December 31, 2012,

Question

The stockholders' equity section of Milroy Corporation as of December 31,
2012, was as follows:
Common stock, par value $2; authorized 20,000 shares;
issued and outstanding 10,000 shares $ 20,000
Paid-in capital in excess of par 30,000
Retained earnings 90,000
$140,000
On March 1, 2013, the board of directors declared a 10% stock dividend, and accordingly 1,000 additional shares were issued. On March 1, 2013, the fair market value of the stock was $6 per share. For the two months ended February 28, 2013, Milroy sustained a net loss of $10,000. What amount should Milroy report as retained earnings as of March 2, 2013?
a. $74,000.
b. $78,000.
c. $84,000.
d. $88,000.

Explanation / Answer

b. $78,000.

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