Dora Company Declared and Distributed a 10% Stock Dividend on 20,000

question 28

Multiple Choice

Dora Company declared and distributed a 10% stock dividend on 20,000 shares of issued and outstanding $5 par value common stock. The market price per share was $9 on the declaration date and was $10 on the distribution date. Which of the following correctly describes the accounting for the declaration and distribution of the stock dividend?

• A) Retained earnings decreased $20,000.
• B) Capital in excess of par increased $10,000.
• C)Common stock increased $18,000.
• D)Retained earnings decreased $18,000.

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Definitions:

Dependent Variable

A variable in an experiment or model that is expected to change in response to changes in independent variables.

Perfect Correlation

Perfect correlation occurs when two variables move in unison, either directly (perfect positive correlation) or inversely (perfect negative correlation), with a correlation coefficient of +1 or -1, respectively.

Perfect Prediction

A situation where a model or analysis predicts the outcome with 100% accuracy, with no errors.

Regression Equation

An equation that describes the line of best fit through a dataset, used to predict the outcome variable.