The Earth Shoe Company, Whose Stock Has a Market Value

question 70

Multiple Choice

The Earth Shoe Company, whose stock has a market value of $20, has the following common equity accounts on its balance sheet: $\begin{array}{ll}\text { Common stock ( } \$ 1 \text { par, } 1,000,000 \text { shares) } & \$ 1,000,000 \\\text { Contributed capital in excess of par } & \$ 14,000,000 \\\text { Retained earnings } & \$ 52,000,000\\\text { Total common stockholders' equity }&\$67,000,000\end{array}$ ? If the firm declares a 5% stock dividend, what will be the retained earnings figure after the dividend is paid?

• A) $1,000,000
• B) $51,000,000
• C) $14,950,000
• D) $5,000,000

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Definitions:

Commitment Statements

Expressions or declarations made by individuals or groups indicating their intention to adhere to agreements or pursue certain actions.

Extreme Opening Offer

An initial proposal in negotiations that is much higher or lower than what one actually expects to achieve, used as a strategic move.

Tactical Tasks

These are specific actions or responsibilities assigned to individuals or units in a military operation, aimed at achieving a particular objective in support of an overall strategy.

Distributive Bargaining

A negotiation strategy where parties compete to divide a fixed resource, often resulting in a win-lose situation.