The Board of Directors of Capstone Inc $\begin{array}{|l|l|l|}\hline \text { Retained earnings } & 9,000 & \\\hline \text { Dividends payable } & & 9,000 \\\hline\end{array}$

question 148

Multiple Choice

The board of directors of Capstone Inc. declared a $0.60 per share cash dividend on its $1 par common stock. On the date of declaration, there were 50,000 shares authorized, 20,000 shares issued, and 5,000 shares held as treasury stock. What is the entry for the dividend declaration?

• A) \(\begin{array}{|l|l|l|}
• \hline \text { Retained earnings } & 9,000 & \\
• \hline \text { Dividends payable } & & 9,000 \\
• \hline
• \end{array}\)
• B) \(\begin{array}{|l|l|l|}
• \hline \text { Retained earnings } & 9,000 & \\
• \hline \text { Cash } & & 9,000 \\
• \hline
• \end{array}\)
• C) \(\begin{array}{|l|l|l|}
• \hline \text { Retained earnings } & 10,000 & \\
• \hline \text { Dividends payable } & & 10,000 \\
• \hline
• \end{array}\)
• D) \(\begin{array}{|l|l|l|}
• \hline \text { Retained earnings } & 10,000 & \\
• \hline \text { Cash } & & 10,000 \\
• \hline
• \end{array}\)

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Definitions:

Cost-plus Pricing

A pricing strategy where the selling price is determined by adding a specific markup to the cost of producing or purchasing the product.

Return on Investment

Return on investment is a measure used to evaluate the efficiency or profitability of an investment, calculated as net income divided by the initial cost of the investment.

Selling Price

The amount at which a product or service is offered to customers, factoring in costs, desired profit margins, and market conditions.

Absorption Costing

An accounting system that factors in all production costs—direct labor, direct materials, and both fixed and variable manufacturing overheads—into the pricing of a product.