Question 12

Vaughn Manufacturing has 500000 shares of $10 par value common stock outstanding. During the year Vaughn declared a 13% stock dividend when the market price of the stock was $36 per share. Three months later Vaughn declared a $0.50 per share cash dividend. As a result of the dividends declared during the year, retained earnings decreased by

a)$2622500

b) $2340000

c) $ 495000

d) $ 471400