Bruno's Has 7,000 Shares Outstanding with a Par Value of £1.00

question 29

Multiple Choice

Bruno's has 7,000 shares outstanding with a par value of £1.00 per share and a market value of £12 per share.The statement of financial position shows £7,000 in the ordinary equity account, £58,000
In the additional paid in capital account and £32,500 in the retained earnings account.The firm just
Announced a 50% (large) stock dividend.What is the value of the retained earnings account after
The dividend?

• A)£29,000
• B)£30,500
• C)£32,500
• D)£34,500
• E)£36,000

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Definitions:

Elastic Demand

A situation where the demand for a product is sensitive to price changes, meaning small price changes lead to large changes in quantity demanded.

Barriers To Entry

Factors that prevent or hinder new competitors from easily entering an industry or area of business, often maintaining high levels of profit for those already established.

Product Differentiation

The process of distinguishing a product or service from others in the market to make it more attractive to a particular target market.

Monopolistic Competition

A market structure where many firms offer products that are similar but not perfect substitutes, allowing for some degree of market power.