The declaration and issuance of a stock dividend larger than 25% of the shares previously outstanding

a. increases common stock outstanding and increases total stockholders' equity.

b. decreases retained earnings but does not change total stockholders' equity.

c. may increase or decrease paid-in capital in excess of par but does not change total

stockholders' equity.

d. increases retained earnings and increases total stockholders' equity.

Question

Conner Baxter

Business

15 November, 23:01

The declaration and issuance of a stock dividend larger than 25% of the shares previously outstanding

a. increases common stock outstanding and increases total stockholders' equity.

b. decreases retained earnings but does not change total stockholders' equity.

c. may increase or decrease paid-in capital in excess of par but does not change total

stockholders' equity.

d. increases retained earnings and increases total stockholders' equity.

+5

Answers (1)

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Darian Preston · Answer 1

b. decreases retained earnings but does not change total stockholders' equity.

Explanation:

a. increases common stock outstanding and increases total stockholders' equity.

FALSE: The Equity does not change as the Retained Earnings are used to issue the Shares, so no change in the total Stockholders Equity

d. increases retained earnings and increase total stockholders' equity.

FALSE: The retained earnings are debited thus, decrease when declaring dividends

c. may increase or decrease paid-in capital above par but do not change total

stockholders' equity.

FALSE: paid in will increase or not be used, as the shares will have a minimum value for the company of his face value.

b. TRUE RE decrease as from there comes to the funds. The total SE does not change it change his composition.