Reference no: EM132825617

Problem 1: The Monroe Corporation has 100,000 common shares issued and outstanding. This stock was issued several years ago at a price above the $10 per share par value. During the current year, the board of directors declared a 30 percent stock dividend so that 30,000 new shares were issued to the stockholders when the price of the stock was $30 per share. As a result of this dividend, what reduction was recorded in the reported amount of retained earnings?

Option 1: -0-

Option 2: $300,000

Option 3: $900,000

Option 4: $600,000