Katie Company Had 40,000 Shares of $2 Par Value Common

question 48

Multiple Choice

Katie Company had 40,000 shares of $2 par value common stock outstanding prior to a 40% common stock dividend declaration and distribution.The market value of the common stock on the declaration date was $10.Which of the following statements incorrectly describes the affect of the common stock dividend and declaration?

• A)Retained earnings decreased $32,000.
• B)Capital in excess of par remained the same.
• C)Contributed capital increased $128,000.
• D)Total stockholders' equity remained the same.

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