Landess Corporation Currently Has 120,000 Shares Outstanding of $1 Par

question 95

Multiple Choice

Landess Corporation currently has 120,000 shares outstanding of $1 par value common stock. The stock was originally issued for $12 per share. On March 15, the board of directors declares a 10% stock dividend when the stock is selling for $16 per share. Which of the following is the correct journal entry to record this transaction?

• A)Debit Common Stock Dividend Distributable $12,000, debit Paid-In Capital in Excess of Par-Common for $180,000 and credit Retained Earnings $192,000.
• B)Debit Retained Earnings $192,000 and credit Common Stock Dividend Distributable $192,000.
• C)Debit Retained Earnings $192,000, credit Common Stock Dividend Distributable $12,000 and credit Paid-In Capital in Excess of Par-Common $180,000.
• D)Debit Paid-In Capital in Excess of Par-Common $192,000 and credit Retained Earnings $192,000.

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Definitions:

Optimum

The condition or degree of an outcome that is most favorable or efficient for a specific purpose.

Maximize

To increase to the greatest possible amount or degree, often used in the context of optimizing performance, efficiency, or profits.

Iso-Profit Line

A graphical representation showing combinations of inputs that result in the same level of profit, used in economic and operational modeling.

Maximization Problem

A type of optimization problem that seeks the highest possible value of an objective function under given constraints.