Question

Crane Company has 504000 shares of $10 par value common stock outstanding. During the year Crane declared a 16% stock dividend when the market price of the stock was $34 per share. Three months later Crane declared a $0.60 per share cash dividend. As a result of the dividends declared during the year, retained earnings decreased by

Answer 1

Answer:

$3,092,544

Explanation:

The computation of the decreased in retained earning is shown below:

= (Number of shares × stock dividend percentage × market price of the stock) + (Number of shares × current year dividend × cash dividend)

=  (504,000 × 0.16 × $34) + (504,000 × 1.16 × $0.60)

= $2,741,760 + 350,784

= $3,092,544

Simply we added the two amount based on before 3 months later and after 3 months later

The 1.16 is computed below:

= 1 + 0.16

= 1.16