Accounting: What the Numbers Mean 9th Edition by Wayne W McManus, Daniel F Viele, David H Marshall

Exercise 119

For the following questions, circle the best response.

Gurwell Corporation declared a 10% stock dividend. Retained earnings should be capitalized for an amount equal to the number of shares to be distributed multiplied by the

a. par value per share.

b. book value per share.

c. market value per share.

d. stated value per share.

e. lower of cost or market value per share.

Step 1 of 6

(a)

When a corporation declares a dividend, retained earnings should be capitalized for an amount equal to the number of share to be distributed multiplied by the market value per share, not the par value per share.