How much is retained earnings reduced by property dividend

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Question 1: Boxer Company owned 20,000 shares of King Company that were purchased in 2009 for $500,000. On May 1, 2011, Boxer declared a property dividend of 1 share of King for every 5 shares of Boxer stock. On that date, there were 50,000 shares of Boxer stock outstanding. The market value of the King stock was $30 per share on the date of declaration and $32 per share on the date of distribution. By how much is retained earnings reduced by the property dividend?

Option A) $150,000.

Option B) $300,000.

Option C) $160,000.

Option D) $320,000

Reference no: EM132523199

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