On October 1, 2016, Chief Corporation declared and issued a 7% stock dividend. B

Question

On October 1, 2016, Chief Corporation declared and issued a 7% stock dividend. Before this date, Chief had 89,000 shares of $5 par common stock outstanding. The market value of Chief Corporation on the date of declaration was $10 per share. As a result of this dividend, Chief's retained earnings will:

Not change.

Increase by $62,300.

Decrease by $63,800.

Decrease by $62,300.

On October 1, 2016, Chief Corporation declared and issued a 7% stock dividend. Before this date, Chief had 89,000 shares of $5 par common stock outstanding. The market value of Chief Corporation on the date of declaration was $10 per share. As a result of this dividend, Chief's retained earnings will:

Explanation / Answer

Retained earning will Decrease by $62,300.

($89000x10) x 7% = $62300

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