A Company Issues a 4 % Stock Dividend When the Price

question 12

Multiple Choice

A company issues a 4 % stock dividend when the price of the stock was $6 per share.The company has 20 million common shares outstanding prior to the stock dividend.How would the company account for this stock dividend?

• A)Debit retained earnings; Credit common shares
• B)Debit cash; Credit common shares
• C)Debit retained earnings; Credit contributed surplus
• D)Debit common shares; Credit contributed surplus

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Definitions:

Operant Conditioning

A learning process through which the strength of a behavior is modified by reinforcement or punishment.

Token Economy

A behavioral modification system that uses tokens as a form of positive reinforcement for desirable behaviors, exchangeable for rewards.

Exchangeable Rewards

Benefits, privileges, or items that can be given in exchange for certain actions, behaviors, or achievements, often used in the context of motivational theories.

Cognitive Therapy

A type of psychotherapy that emphasizes the important role of thinking in how we feel and what we do, aiming to change negative patterns of thought to relieve symptoms of mental disorders such as depression and anxiety.