The Martin Company's stockholders' equity accounts have the following balances as of December 31, 2010: Common stock, $20 par (25,000 shares issued of which 2,000 are being held as treasury stock) $ 500,000 Additional paid-in capital 750,000 Retained earnings 2,250,000 $3,500,000 Less: Treasury stock (2,000 shares at cost) (120,000) Total stockholders' equity $3,380,000

 The Martin Company's stockholders' equity accounts have the following balances as of December 31, 2010:

Common stock, $20 par (25,000 shares issued of which
2,000 are being held as treasury stock)		$   500,000
Additional paid-in capital		750,000
Retained earnings		2,250,000
		$3,500,000
Less: Treasury stock (2,000 shares at cost)		(120,000)
	Total stockholders' equity	$3,380,000

 

 

On January 2, 2011, the board of directors of Martin declared a 10% stock dividend to be distributed on February 15, 2011. The market price of Martin Company's common stock was $65 per share on January 2, 2011. On the date of declaration, the retained earnings account should be decreased by

Answer

		zero; only a memorandum entry is required
		$  50,000
		$149,500
		$162,500

 

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