A Corporation Declares a Dividend of

question 65

Multiple Choice

A corporation declares a dividend of $.75 per share on 12,500 shares of common stock. Which of the following would be included in the entry to record the declaration?

• A) Retained earnings would be debited for $9,375.
• B) Paid-in capital in excess of par would be credited for $9,375.
• C) Retained earnings would be credited for $9,375.
• D) Dividends payable would be debited for $9,375.

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Definitions:

Publicly Traded

A designation for companies whose shares are bought and sold on the open market through a stock exchange, allowing for broad public investment.

Preferred Stock

A class of ownership in a corporation with a higher claim on assets and earnings than common stock, usually with dividend payments that are prioritized over common stock dividends.

Common Stock

Shares that represent ownership in a corporation, usually giving holders voting rights and a share in the company's profits.

Preferred Stock

A type of share in a corporation that gives the owner a greater entitlement to the firm's earnings and assets than holders of common stock.