A Mining Company Declared a Liquidating Dividend

question 49

Multiple Choice

A mining company declared a liquidating dividend.The journal entry to record the declaration must include a debit to

• A)Retained Earnings.
• B)Share Premium.
• C)Accumulated Depletion.
• D)Accumulated Depreciation.

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Definitions:

Treasury Stock

Shares of a company's own stock that it has reacquired from shareholders and holds, reducing the amount of outstanding stock on the market.

Cash Dividend

Cash payments made by corporations to their owners from profits earned.

Authorized Shares

The highest quantity of shares that a company can legally distribute, as stated in its charter.

Noncumulative

Pertaining to preferred stock dividends, where dividends not paid in one period do not accumulate and are not required to be paid in future periods.