A Company Originally Issued 10,000 Shares of $5 Par Value

question 30

Multiple Choice

A company originally issued 10,000 shares of $5 par value common stock at $9 per share. The board of directors declares an 8% stock dividend when the market price of the stock is $10 a share. Which of the following is included in the entry to record the declaration of a stock dividend?

• A)Retained Earnings is debited for $4,000.
• B)Common Stock-$5 Par Value is credited for $7,200.
• C)Common Stock is credited for $8,000.
• D)Retained Earnings is debited for $8,000.

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Definitions:

Revenues Journal

A record of sales and income transactions, typically used in accounting to track and manage revenue generation.

Cash Receipts Journal

An accounting journal used to record all cash inflows or money received by the business.

All-purpose Journal

A general ledger used in accounting to record financial transactions that do not fit specifically into other specialized journals.

Purchases Journal

A record where a business notes all purchases of goods intended for resale or use in production, particularly on credit.