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Please Explain how do they get the answer (decreased by 92,400) On October 1, 2016, Chief Corporation declared and issued a 12% stock dividend. Before

Please Explain how do they get the answer (decreased by 92,400)

On October 1, 2016, Chief Corporation declared and issued a 12% stock dividend. Before this date, Chief had 77,000 shares of $5 par common stock outstanding. The market value of Chief Corporation on the date of declaration was $10 per share. As a result of this dividend, Chief's retained earnings will:

Not change.

Increase by $92,400.

Decrease by $93,900.

Decrease by $92,400.

Solution:

Retained earnings (9,240 shares $10/share) 92,400
Common stock (9,240 shares $5/share) 46,200
Paid-in capitalexcess of par 46,200

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