QUESTION

The Larson Company has 100,000 shares of $10 par value common stock outstanding that was originally issued for $18 per share. In the current year, when the price of this stock increased to $60 per share, the company's board of directors issued a two-for-one stock split. The price of the stock immediately fell to $30 per share. By what amount should the company reduce its Retained Earnings balance as a result of this split

A $6,000,000

B $3,000,000

C -0-

QUESTION

The board of directors for the Carson Corporation declares a $1 per share cash dividend on April 1, Year One, to be paid to owners of record on April 17, Year One, with the checks being distributed on April 29, Year One. Prior to April 1, the company had issued 100,000 shares of common stock but held 10,000 treasury shares. Another 10,000 shares were repurchased on April 4, Year One. What is the decrease in retained earnings created by this dividend ?

A $90,000

B $80,000

C -0-