A Corporation Had 40,000 Shares of $10 Par Value Common

question 12

Multiple Choice

A corporation had 40,000 shares of $10 par value common stock outstanding on August 1.Later that day,the board of directors declared a 9% stock dividend when the market value of each share was $72.The entry to record this dividend is:

• A)
• \[\begin{array} { | l | r | r | }
• \hline \text { Retained Earnings } & 259,200 & \\
• \hline \text { Common Stock Dividend Distributable } & & 259,200 \\
• \hline
• \end{array}\]
• B)
• \[\begin{array} { |l| r | r | }
• \hline \text { Retained Earnings } & 259,200 & \\
• \hline \text { Common Stock Dividend Distributable } & & 259,200 \\
• \hline
• \end{array}\]
• C)
• \[\begin{array} { |l | r | r | }
• \hline \text { Retaired Earning } & 259,200 & \\
• \hline \text { Common Stock Dividend Distributable } & & 3 6 , 0 0 0 \\
• \hline \begin{array} { l }
• \text { Contributed Capital in Excess of Par Value } \\
• \text { Common Stock }
• \end{array} & & 223,200\\
• \hline
• \end{array}\]
• D)
• \(\begin{array}{|l|r|r|}
• \hline \text { Retained Earnings } & 36,000 & \\
• \hline \text { Common Stock Dividend Distributable } & & 36,000 \\
• \hline
• \end{array}\)
• E)No entry is made until the stock is issued

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Definitions:

Object of Judgement

The entity or individual that is being evaluated or assessed in a particular situation.

Autokinetic Experiment

A psychological experiment where a stationary point of light in a dark room appears to move because of small eye movements, illustrating the effect of suggestion or social influence on beliefs.

Frame of Reference

A system of values or beliefs against which judgments are made or a context through which a situation can be viewed.

Polarised

A situation or condition that causes division, leading to two distinctly opposed groups or perspectives.