Quirk Corporation issued a 100% stock dividend of its common stock which had a par value of $10 before and after the dividend

Quirk Corporation issued a 100% stock dividend of its common stock which had a par value of $10 before and after the dividend. At what amount should retained earnings be capitalized for the additional shares issued?

a. There should be no capitalization of retained earnings.
b. Par value
c. Market value on the declaration date
d. Market value on the payment date


Answer: Par value

The payout ratio can be calculated by dividing

a. dividends per share by earnings per share.
b. cash dividends by net income less preferred dividends.
c. cash dividends by market price per share.
d. dividends per share by earnings per share and dividing cash dividends by net income less preferred dividends.


Answer: cash dividends by net income less preferred dividends