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

question 8

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 stock dividend?

• A) Retained earnings is debited for $4,000.
• B) Common stock 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:

Defined Benefit Plan

A type of pension plan where an employer guarantees a specific retirement benefit amount to employees based on salary history and years of service.

401(k) Plan

A retirement savings plan sponsored by an employer which allows employees to save and invest a portion of their paycheck before taxes are taken out.

Downside Risks

Potential negative outcomes or losses that may occur as a result of an investment or decision.

401(k)s

Tax-advantaged, employer-sponsored retirement saving plans that allow employees to save a portion of their paycheck before taxes are taken out.