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masya89
16 days ago
11

DuBois, Inc. announces a large stock dividend of 65% of the 4.96 million outstanding shares of common stock. The current price p

er share is $13.85. Par value of the stock is $0.01 per share. What effect does this dividend have on retained earnings?
A. $49,600 decrease
B. $32,240 decrease
C. $44,652,000 decrease
D. $11,591,288 decrease
E. None of the above
Business
1 answer:
harina [3.2K]16 days ago
6 0

Answer:

The correct answer is option (B).

Explanation:

The dividend per share can be calculated as follows:

= (65% of the par value of the stock)

= (65% × 0.01)

= $0.0065

Thus, the total dividend is computed as follows:

= (Dividend per share × number of outstanding common shares)

= (0.0065 × 4.96 million)

= $32,240

Consequently, the dividend will result in a reduction of retained earnings.

This leads us to conclude that option B is the correct choice.

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