ABC Declared a Property Dividend $\begin{array}{|l|l|l|}\hline \text { Retained earnings } & 70,000 & \\\hline \text { Property dividends payable } & & 70,000 \\\hline\end{array}$

question 55

Multiple Choice

ABC declared a property dividend. The dividend consisted of 10,000 common shares of its investment in XYZ Company. The shares had originally been purchased at $4 per share and had a $1 par. The value of the shares on the declaration date is $7 per share. What is the first entry that should be recorded related to this dividend?

• A) \(\begin{array}{|l|l|l|}
• \hline \text { Retained earnings } & 70,000 & \\
• \hline \text { Property dividends payable } & & 70,000 \\
• \hline
• \end{array}\)
• B) \(\begin{array}{|l|l|l|}
• \hline \text { Retained earnings } & 70,000 & \\
• \hline \text { Property dividends payable } & & 40,000 \\
• \hline \text { Gain } & & 30,000 \\
• \hline
• \end{array}\)
• C) \(\begin{array}{|l|l|l|}
• \hline \text { Investment in XYZ } & 30,000 & \\
• \hline \text { Retained earnings } & & 30,000 \\
• \hline
• \end{array}\)
• D) \(\begin{array}{|l|l|l|}
• \hline \text { Investment in XYZ } & 30,000 & \\
• \hline \text { Gain on investment } & & 30,000 \\
• \hline
• \end{array}\)

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Definitions:

Bank Reconciliation

The process of matching and comparing figures from accounting records against those presented on a bank statement.

Ending Bank Statement Balance

The final balance on a bank statement at the end of a given period, reflecting all transactions that occurred during that time.

Allowance for Doubtful Accounts

A financial accounting tool used to estimate the amount of receivables that will likely be uncollectable.

Bad Debt Expense

An accounting term representing the amount of revenue considered uncollectible from customers or clients, typically recorded as an expense.