Question

On December 31, 2017, the stockholders' equity section of Arndt, Inc., was as follows: Common stock,...

On December 31, 2017, the stockholders' equity section of Arndt, Inc., was as follows: Common stock, par value $10; authorized 30,000 shares; issued and outstanding 9,000 shares $ 90,000 Additional paid-in capital 116,000 Retained earnings 194,000 Total stockholders' equity $400,000 On March 31, 2018, Arndt declared a 15% stock dividend, and accordingly 1,350 additional shares were issued, when the fair value of the stock was $20 per share. For the three months ended March 31, 2018, Arndt recorded a net income of $40,000. The balance of Arndt’s retained earnings as of March 31, 2018, should be

a. $127,000.

b. $194,000.

c. $154,800.

d. $207,000.

Homework Answers

Answer #1
Retained earning beginning $         1,94,000
Add:
Net Income $             40,000
Less:
Stock Dividend $             27,000
(1350 shares *$20)
Retained earning at ending $         2,07,000
Correct Option
: d. $207,000.
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