Cloud Manufacturing Declared a 10% Stock Dividend When It Had

question 204

Multiple Choice

Cloud Manufacturing declared a 10% stock dividend when it had 700,000 shares of $3 par value common stock outstanding.The market price per common share was $12 per share when the dividend was declared.The entry to record this dividend declaration includes a credit to

• A)Stock Dividends for $210,000.
• B)Paid-in Capital in Excess of Par for $630,000.
• C)Common Stock for $210,000.
• D)Common Stock Dividends Distributable for $840,000.

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Definitions:

Trading Securities Portfolio

A collection of securities bought and held primarily for sale in the short term to generate income on short-term price differences.

Fair Value

The estimated price at which an asset can be bought or sold in an orderly transaction between market participants at the valuation date.

Unrealized Gain

An increase in the value of an asset that has not been sold, thus not yet generating actual profit.

Readily Marketable

Items or securities that are readily marketable can be quickly sold in the market without significantly affecting their price.