97. The stockholders' equity section of Gunkel Corporation as of December 31, 2025, was as follows: Common stock, par value $2; authorized 20,000 shares; issued and outstanding 10,000 shares Paid-in capital in excess of par Retained earnings $ 20,000 30,000 85,000 $135,000 On March 1, 2026, the board of directors declared a 15% stock dividend, and accordingly 1,500 additional shares were issued. On March 1, 2026, the fair value of the stock was $6 per share. For the two months ended February 28, 2026, Gunkel sustained a net loss of $15,000. What amount should Gunkel report as retained earnings as of March 1, 2026? a. $61,000. b. $67,000. c. $71,000. d. $77,000. Ans: A, LO: 3, Bloom: AP, Difficulty: Difficult, Min: 4, AACSB: Knowledge, AICPA BC: None, AICPA AC: Measurement, Interpretation and Analysis, AICPA PC: None, IMA: Reporting and Control: Financial Statement Preparation, IFRS: None Solution: $85,000 - $15,000 - (1,500 x $6) = $61,000.