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The P Company has the following capital structure:

Common stock ($5 par, 250,000 shares)    $1,250,000

Contributed capital in excess of par            $5,000,000

Retained earnings                                     $4,000,000

The company declares a 10 percent stock dividend. The pre-stock dividend market price of the company’s stock is $50. Determine the balance in the retained earnings account after the stock dividend. Determine the balance in the common stock account after the stock dividend.

Financial Management, Finance

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