The Percolator Company Has the Following Capital Structure ? the Company Declares a 10% Stock Dividend

Multiple Choice

The Percolator Company has the following capital structure: $\begin{array}{ll}\text { Common stock ( } \$ 5 \text { par, } 250,000 \text { shares) } & \$ 1,250,000 \\\text { Contributed capital in excess of par } & \$ 5,000,000 \\\text { Retained earnings } & \$ 4,000,000\end{array}$ ? The company declares a 10% 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.

A) $4,000,000
B) $1,375,000
C) $2,750,000
D) $1,250,000