On December 1,2019,Murphy,Inc

question 145

Multiple Choice

On December 1,2019,Murphy,Inc.had 35,000 shares of $7 par value common stock issued and outstanding.The next day it declared a 50% stock dividend.The market value of the stock on that date was $15 per share.Which of the following is the correct journal entry to record this transaction?

• A) debit Stock Dividends $525,000 and credit Cash $525,000
• B) debit Stock Dividends $525,000, credit Common Stock $245,000, and credit Paid-In Capital in Excess of Par $280,000
• C) debit Common Stock $122,500 and credit Cash $122,500
• D) debit Stock Dividends $122,500 and credit Common Stock Dividend Distributable $122,500

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Definitions:

Target Cost

The market-driven price that a product must meet or go below, after subtracting the desired profit margin, to remain competitive.

Competitor's Product

A product or service offered by a business rival in the same market, directly competing with one's own product or service offering.

Useful Life

The estimated duration a fixed asset is expected to be economically useful to an entity.

Operating Cost

Expenses associated with the day-to-day operations of a business, including rent, utilities, and payroll.