The Martin Company's stockholders' equity - 14658

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Request Description

 

 The Martin Company's stockholders' equity accounts have the following balances as of December 31, 2010:

Common stock, $20 par (25,000 shares issued of which

 

   2,000 are being held as treasury stock)

$   500,000

Additional paid-in capital

750,000

Retained earnings

  2,250,000

 

$3,500,000

Less: Treasury stock (2,000 shares at cost)

   (120,000)

 

Total stockholders' equity

$3,380,000

     

 

 

On January 2, 2011, the board of directors of Martin declared a 10% stock dividend to be distributed on February 15, 2011. The market price of Martin Company's common stock was $65 per share on January 2, 2011. On the date of declaration, the retained earnings account should be decreased by

Answer

 

zero; only a memorandum entry is required

 

$  50,000

 

$149,500

 

$162,500

 

Solution Description

 

 The Martin Company's stockholders' equity accounts have the following balances as of December 31, 2010:

Common stock, $20 par (25,000 shares issued of which

 

   2,000 are being held as treasury stock)

$   500,000