The B Spaniel Company Has Common Stock with a $5 Par

question 41

Multiple Choice

The B. Spaniel Company has Common Stock with a $5 par value. 100,000 shares were authorized and 25,000 shares were issued. Common stock is currently selling at $13 per share. The entry to record the distribution of a 15% common stock dividend includes:

• A)a debit to Dividends Payable for $30,000.
• B)a debit to Retained Earnings for $48,750.
• C)a credit to Common Stock for $18,750.
• D)both a credit to Common Stock for $18,750 and debit to Retained Earnings for $48,750.

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Definitions:

Monopolist

A monopolist is a single supplier in a market who has significant control over prices and the availability of a product or service.

Economies of Scale

Economies of scale are cost advantages that enterprises obtain due to size, output, or scale of operation, with cost per unit of output generally decreasing with increasing scale.

Economies of Scale

Cost advantages reaped by companies when production becomes efficient, as the scale of operation increases with the reduction in average costs.

Fixed Costs

Fixed costs are business expenses that remain unchanged regardless of the level of production or sales, such as rent, salaries, and insurance premiums.