PAC Corporation Has 500,000 Shares of $5 Par Value Common

question 9

Multiple Choice

PAC Corporation has 500,000 shares of $5 par value common stock authorized,and 300,000 shares issued and outstanding.The market value of the stock is $14 per share.The journal entry to record the declaration of a 15% stock dividend would include a:

• A)credit to dividend payable for $1,050,000
• B)credit to Common Stock for $375,000
• C)debit to Retained Earnings for $630,000
• D)Credit to Stock Dividends Distributable for $375,000

---

Definitions:

Accounting Standard

Guidelines and rules set by a recognized standard-setting body that dictate how financial transactions and other accounting events should be reported in financial statements.

Share Buy-back

A corporate financial strategy in which a company purchases its own shares from the marketplace, reducing the number of outstanding shares.

Hostile Takeover

An acquisition attempt by a company or individual without the consent or cooperation of the target company's management.

Capital Structure

Refers to the mix of debt and equity that a company uses to finance its operations and growth.