On February 16, a Company Declares a 34 $\prime$ Dividend to Be Paid on April 5

question 134

Multiple Choice

On February 16, a company declares a 34 $\prime$ dividend to be paid on April 5. There are 2 million shares of common stock issued and 100,000 shares of treasury stock. What does the company record in February?

• A) A debit to Dividends Payable and a credit to Cash for $680,000.
• B) A debit to Dividends Declared and a credit to Dividends Payable for $646,000.
• C) A debit to Dividends Payable and a credit to Cash for $646,000.
• D) A debit to Dividends Declared and a credit to Dividends Payable for $680,000.

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Definitions:

Security Interest

An official right or charge on property pledged as security, often for the purpose of loan repayment assurance.

Retail Installment

A payment plan that allows consumers to pay for goods or services over time, typically with interest, in retail transactions.

Financing Statement

A document filed to give public notice of a secured party’s interest in the debtor’s personal property, usually in connection with a secured transaction.

Bankruptcy

The legal status of a person or entity that cannot repay the debts they owe to creditors, leading to a legal process for resolution.