Acme Owns 4,000 Shares of XYZ

question 118

Multiple Choice

Acme owns 4,000 shares of XYZ.XYZ has 50,000 total shares of stock outstanding.XYZ paid $0.82 per share in cash dividends to its stockholders.Acme should record a:

• A)Debit to Dividends for $41,000.
• B)Debit to Dividends for $3,280.
• C)Debit to Cash for $3,280.
• D)Debit to Long-Term Investments for $3,280.
• E)Credit to Long-Term Investments for $3,280.

---

Definitions:

After-Tax Discount Rate

The rate of return on an investment after accounting for taxes, used in net present value calculations to determine the value of future cash flows.

Income Tax Rate

The rate at which income is taxed for individuals or corporations.

Straight-Line Depreciation

A method of allocating the cost of a tangible asset over its useful life in an equal yearly amount.

Renovation Cost

The total expenses incurred during the process of improving or updating a property.