Cambridge Corp

question 102

Multiple Choice

Cambridge Corp. declared a 5% stock dividend. Will Wales owned 300 shares of Cambridge before the dividend. Cambridge shares were trading at $21 before the dividend. Which of the following will be true after the dividend is distributed?

• A) The total market value of Will's shares was $6,300 before the stock dividend but will probably decrease after the stock dividend.
• B) The total market value of Will's shares was $6,300 before the stock dividend and $6,615 after the stock dividend.
• C) Will owned 300 shares before the stock dividend and 315 shares after the stock dividend.
• D) Fewer investors will be able to buy Cambridge shares.

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Definitions:

Salaries Expense

An expense recorded to represent wages or salaries paid to employees.

Salaries Payable

The liability account that contains the amounts of any salaries owed to employees, which have not yet been paid.

Supplies Account

An account used to track the costs of small items or materials that are used in the operations of a business.

Adjusting Journal Entry

A journal entry made at the end of an accounting period to allocate income and expenditures to the correct period, ensuring the financial statements reflect accurate and up-to-date information.