Jennings Corp

question 10

Multiple Choice

Jennings Corp.has 1,000,000 shares of $1 par value stock authorized,200,000 shares issued,and 150,000 shares outstanding.On June 1,2014,Jennings' Board of Directors declared a 10% stock dividend.At that time,the stock had market value of $30.How would the company record this transaction?

• A)Debit Retained Earnings for $15,000 and credit Common Stock Dividend Distributable for $15,000.
• B)Debit Retained Earnings for $450,000,credit Common Stock Dividend Distributable for $15,000,and credit Paid-In Capital in Excess of Par Value,Common Stock for $435,000.
• C)Debit Common Stock Dividend Distributable for $450,000 and credit Common Stock,$1 Par Value for $450,000.
• D)Debit Common Stock Dividend Distributable for $435,000 and credit Common Stock,$1 Par Value for $435,000.
• E)Debit Common Stock Dividend Distributable for $15,000 and credit Common Stock,$1 Par Value for $15,000.

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Definitions:

Discount Rate

The interest rate charged to commercial banks and other depository institutions on loans they receive from their regional Federal Reserve Bank's lending facility.

Money Market Instruments

Short-term financial instruments that are highly liquid and designed for cash management by investors, including treasury bills, commercial paper, and certificates of deposit.

Government Bond

Securities issued by governments to finance public expenditure, typically with a promise of future repayment and interest payments.

State Income Taxes

Taxes levied by individual states on the income of residents and businesses within their jurisdiction.