The Board of Directors of Irondale Corporation Declared a Cash

question 18

Multiple Choice

The board of directors of Irondale Corporation declared a cash dividend of $2.50 per share on 57,000 shares of common stock on June 14, 2010. The dividend is to be paid on July 15, 2010, to shareholders of record on July 1, 2010. The effects of the entry to record the declaration of the dividend on June 14, 2010 , are to

• A) decrease stockholders' equity and increase liabilities.
• B) increase stockholders' equity and increase liabilities.
• C) decrease stockholders' equity and decrease assets.
• D) increase stockholders' equity and decrease assets.

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Definitions:

Work in Process Inventory

Work in process inventory consists of partially completed goods that are still in the production process, representing a key component of a manufacturer's current assets.

Finished Goods

Goods that have finished being manufactured and are available for purchase.

Total Manufacturing Costs

The sum of all costs directly involved in the production of a product, including direct labor, materials, and manufacturing overhead.

Work in Process Inventory

Items that are in the production process but have not yet been completed or turned into finished goods.