Dubois, inc. announces a large stock dividend of 65% of the 4.96 million outstanding shares of common stock. the current price per 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

Option (B) is correct.

Explanation:

Dividend per share:

= (65% of Par value of the stock)

= (65% × 0.01)

= $0.0065

Hence, the total dividend:

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

= (0.0065 × 4.96 million)

= $32,240

Hence, the dividend would cause a decrease in retained earnings.

Therefore, the correct option is B.

a.   is the correct choice.

good luck. : )

previous business sales - c.