A Corporation Declared and Issued a 15% Stock Dividend on October

question 85

Multiple Choice

A corporation declared and issued a 15% stock dividend on October 1. The following information was available immediately prior to the dividend: $\begin{array} { l } \text {Retained earnings }&\$750,000 \\ \text { Shares issued and outstanding}&60,000 \\ \text {Market value per share }&\$15 \\ \text { Par value per share}& \$5\\\end{array}$
The amount that contributed capital will increase (decrease) as a result of recording this stock dividend is:

• A)$(135,000).
• B)$135,000.
• C)$(45,000).
• D)$45,000.
• E)$0.

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Definitions:

Net Income

The amount of profit that remains after all operating expenses, taxes, and costs have been subtracted from total revenue.

Net Cash

Net cash refers to the amount of cash that remains after subtracting a company's total cash outflows from its total cash inflows, indicating the company's liquidity position.

Income Taxes

Charges imposed by the authorities on earnings from companies and individuals within their territory.