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The Western Pipe Company has the following capital section in its balance sheet. Its stock is currently selling for $7 per share. Common stock (30,000

The Western Pipe Company has the following capital section in its balance sheet. Its stock is currently selling for $7 per share.

Common stock (30,000 shares) $60,000

Retained earnings 130,000

$190,000

The firm intends to first declare a 5 percent stock dividend and then pay a $0.20 cash dividend (which also causes a reduction of retained earnings).

1- Show the capital section of the balance sheet after the first transaction and then after the second transaction.

Western Pipe Company

After 1sttransaction

Common stock (31,500 shares) $63000Incorrect answer

Retained earnings 119500Correct answer

119500 Correct

182500 Incorrect

Western Pipe Company

After 2ndtransaction

Common stock (31,500 shares) $63000Incorrect

Retained earnings 113200Correct

176200 Incorrect

why is the common stock is incorrect could you help me to solve it correctly ?

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