A Company with 100,000 Authorized Shares of $4 Par Common

question 71

Multiple Choice

A company with 100,000 authorized shares of $4 par common stock issued 50,000 shares at $9. Subsequently, the company declared a 2% stock dividend on a date when the market price was $10 a share. The effect of the declaration and issuance of the stock dividend is to

• A) decrease retained earnings, increase common stock, and increase paid-in capital
• B) increase retained earnings, decrease common stock, and decrease paid-in capital
• C) increase retained earnings, decrease common stock, and increase paid-in capital
• D) decrease retained earnings, increase common stock, and decrease paid-in capital

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Definitions:

Incident Report

A document detailing the occurrence of an event, often an accident or unexpected incident, within an organization or company, used for future prevention and record-keeping.

Unexpected

Events or findings that deviate from what is normally anticipated or considered usual, often requiring special attention or strategy.

Guidelines

A set of recommended practices or instructions designed to shape actions or achieve desired outcomes.

Directive

An instruction or order given with authority, often within an organizational or legal context.