Global Corporation Had 50,000 Shares of $20 Par Value Common

question 214

Multiple Choice

Global Corporation had 50,000 shares of $20 par value common stock outstanding on July 1. Later that day the board of directors declared a 10% stock dividend when the market value of each share was $27. The entry to record the dividend declaration is:

• A) No entry is made until the stock is issued.
• B) Debit Retained Earnings $135,000; credit Common Stock Dividend Distributable $135,000.
• C) Debit Retained Earnings $135,000; credit Cash $135,000.
• D) Debit Retained Earnings $100,000; credit Common Stock Dividend Distributable $100,000.
• E) Debit Retained Earnings $135,000; credit Common Stock Dividend Distributable $100,000; credit Paid-In Capital in Excess of Par Value, Common Stock $35,000.

---

Definitions:

Predictive Validity

When a scale is related to a concrete outcome or behavior.

Discriminant Validity

The extent to which a construct is truly distinct from other constructs by empirical standards, often assessed through its lack of correlation with unrelated constructs.

Convergent Validity

When a scale correlates with other scales measuring the same construct.

Face Validity

When scale items appear, at face value, to measure what they are supposed to measure.