Global Corporation Had 50,000 Shares of $20 Par Value Common

question 14

Multiple Choice

Global Corporation had 50,000 shares of $20 par value common stock outstanding on July 1. Later that day the board of directors declared a 10% stock dividend when the market value of each share was $27. The entry to record this dividend is:

• A)Debit Retained Earnings $135,000; credit Common Stock Dividend Distributable $135,000.
• B)Debit Retained Earnings $135,000; credit Cash $135,000.
• C)Debit Retained Earnings $135,000; credit Common Stock Dividend Distributable $100,000; credit Paid-In Capital in Excess of Par Value, Common Stock $35,000.
• D)Debit Retained Earnings $100,000; credit Common Stock Dividend Distributable $100,000.
• E)No entry is made until the stock is issued.Common Stock Dividend Distributable: 50,000 shares * 10% × $20 = $100,000

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Definitions:

Pledging Agreement

A contract in which a borrower pledges an asset as collateral for a loan, ensuring the lender can seize the asset if the loan is not repaid.

Account Receivable

Money owed to a business by its clients or customers for goods or services delivered or used but not yet paid for.

Excess Cash

The amount of cash holdings that exceeds what a company requires for its immediate operational needs, often considered for investment or distribution.

Little Return

A situation where an investment yields a minimal profit, often below the expectations of the investor.