Tangshan Mining Has Common Stock at Par of $200,000, Paid-In

question 28

Multiple Choice

Tangshan Mining has common stock at par of $200,000, paid-in capital in excess of par of $400,000, and retained earnings of $280,000. In states where the firm's legal capital is defined as the total of par value and paid-in capital in excess of par, the firm could pay out ________ in cash dividends without impairing its capital.

• A) $280,000
• B) $400,000
• C) $480,000
• D) $600,000

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Definitions:

Rationality

Primarily, the ability to think and to act according to goals, plans, and strategies. Rationality is also thinking well and effectively and having good, well-conceived goals, plans, and strategies. In the first instance, rationality is to be contrasted with nonrationality; in the second instance, it is contrasted with irrationality. Worms are nonrational; fools and fanatics are irrational.

Powerful

Pertaining to having great power, influence, or effect.

Empirical Truth

A statement that is true because of the facts and knowable through experience.

A Priori Truth

Knowledge that is true independently of experience, known through reason alone.