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What would be the reduction in watsons stockholders equity

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Question - Watson Corporation owned 600,000 shares of Nixon Corporation stock. On December 31, 2012, when Watson's account "Investment in Common Stock of Nixon Corporation" had a carrying value of $5 per share, Watson distributed these shares to its stockholders as a dividend. Watson originally paid $8 for each share. Nixon has 2,000,000 shares issued and outstanding, which are traded on a national stock exchange. The quoted market price for a Nixon share was $7 on the declaration date and $9 on the distribution date. What would be the reduction in Watson's stockholders' equity as a result of the above transactions?

a. $2,400,000.

b. $3,000,000.

c. $4,800,000.

d. $5,400,000.

Reference no: EM131811832

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