A Corporation Declared a Stock Dividend on November 1 and Issued

question 185

Multiple Choice

A corporation declared a stock dividend on November 1 and issued 9,000 shares of stock to its stockholders.Prior to the dividend,the balance in Retained Earnings was $850,000,the number of shares of $5 par value stock issued and outstanding was 60,000,and the market value of the stock was $12.This stock dividend will cause total stockholders' equity to:

• A) remain unchanged.
• B) increase by $45,000.
• C) decrease by $108,000.
• D) decrease by $63,000.

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Definitions:

Cash Discounts

Incentives offered by sellers to encourage buyers to pay their bills quickly, usually expressed as a percentage of the invoice amount if paid within a specific period.

Internal Controls

Processes put in place by management to ensure reliability of financial reporting, effective and efficient operations, and compliance with laws and regulations.

Cash Payments

Outflows of cash to settle obligations or purchase goods and services.

Voucher

A written authorization or proof of transaction that details the terms and conditions of a financial exchange or payment.