A Company Declares a 40% Large Stock Dividend When There

question 136

Multiple Choice

A company declares a 40% large stock dividend when there were 4 million common shares outstanding with a $1 par value.The current market price is $20 per common share.Which of the following will be the effect of the stock dividend?

• A)Retained earnings will decrease by $1.6 million and common stock will increase by $1.6 million.
• B)Retained earnings will decrease by $1.6 million and additional paid-in capital will increase by $1.6 million.
• C)Retained earnings will decrease by $32 million and common stock will increase by $32 million.
• D)Retained earnings will decrease by $32 million,common stock will increase by $1.6 million and additional paid-in capital will increase by $30.4 million.

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Definitions:

Supervisor Sets

Supervisor sets refer to the specific guidelines or expectations set by supervisors for their subordinates to follow in an organizational context.

Employee's Abilities

Refers to the skills, knowledge, and competencies that an individual possesses, which enable them to perform tasks effectively in a workplace.

Valence

In the field of motivation, valence refers to the emotional significance attached to something, determining how desirable or undesirable it is.

Expectancy Theory

A motivational theory suggesting that an individual's motivation is influenced by their expectation of achieving a desired outcome and the value they place on that outcome.