Excelsior Company's Capital Structure Is as Follows ? the Current Market Price of the Firm's Common Stock

question 33

Multiple Choice

Excelsior Company's capital structure is as follows: $\begin{array}{lr}\text { Common stock ( } \$ 2 \text { par value, } 2,000,000 \text { shares) } & \$ 4,000,000 \\\text { Contributed capital in excess of par } & 16,000,000 \\\text { Retained earnings } & 23,000,000\\\text { Total common stockholders' equity }&\$43,000,000\end{array}$ ? The current market price of the firm's common stock is $30. Assuming the firm declares a 10% stock dividend, determine the balance in the contributed capital in excess of par and retained earnings accounts.

• A) $22,000,000; $17,000,000
• B) $21,600,000; $17,000,000
• C) $21,600,000; $23,000,000
• D) $17,000,000; $21,600,000

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Definitions:

Psychological Tension

A state of mental or emotional strain, often resulting from challenging or demanding circumstances.

Attributions

Explanations that individuals create for the causes of their own and others' behaviors and events.

Fundamental Attribution Error

The tendency to overemphasize personality-based explanations for behaviors observed in others while underestimating the influence of situational factors.

Self-serving Bias

A common tendency to attribute one's successes to personal characteristics and failures to external factors.