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19 July, 12:48

On March 1, 2019, Baltimore Corporation had 65,000 shares of common stock outstanding with a par value of $5 per share. On March 1, Baltimore Corporation authorized a 15% stock dividend when the market value was $18 per share. Use this information to calculate the amount either (debited) or credited to retained earnings. Enter as a negative number if retained earnings is debited and a positive number if retained earnings is credited.

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  1. 19 July, 14:26
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    retained earnings 175,500

    common stock 48,750

    paid in excess of par 126,750

    Explanation:

    The diivdends are 15% so we multiply this by the shares outstanding to know the amount of shares:

    65,000 x 15% = 9,750 shares

    Then we multiply by the market value to know the amount needed:

    9,750 x $18 market value = $175,500 stock dividends

    The common stock will be 9,750 at par

    and the remainder will be paid in excess.

    9,750 x 5 = 48,750 CS

    175,500 - 48,750 = 126,750
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