Odessa Corporation Had 20,000 Shares of $2 Par Value Common

question 227

Multiple Choice

Odessa Corporation had 20,000 shares of $2 par value common stock outstanding on July 1.On that day,the board of directors declared a 10% stock dividend when the market value of each share was $9.The stock dividend is to be distributed on July 20 to stockholders of record on July 10.The entry to record the issuance of the shares on July 20 is:

• A)Debit Common Stock Dividends Distributable $18,000; credit Common Stock $18,000.
• B)Debit Retained Earnings $18,000; credit Common Stock Dividends Distributable $4,000; credit Paid-In Capital in Excess of Par Value,Common Stock $14,000.
• C)Debit Retained Earnings $18,000; credit Common Stock $4,000; credit Paid-In Capital in Excess of Par Value,Common Stock $14,000.
• D)Debit Retained Earnings $18,000; credit Common Stock $18,000.
• E)Debit Common Stock Dividends Distributable $4,000; credit Common Stock $4,000.

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Definitions:

Confusing

Something that is difficult to understand or makes one perplexed.

Implied Warranty

A legal doctrine that guarantees that a product or service will meet certain minimum standards of quality and functionality, even if not expressly stated.

Assurances

Statements or actions intended to provide confidence or certainty about a condition or result.

Representations

Statements of fact made by one party to another before or at the time of entering into a contract, intended to induce the other party into the contract.