A Corporation Was Organized on January 1

question 116

Multiple Choice

A corporation was organized on January 1. At that time, 10,000 shares of common were sold and issued at $10.00 per share cash. $20,000 of the proceeds was used to purchase equipment. The corporation had promised to pay $2.00 per share in dividends during the year if income exceeded $40,000. As it turned out, income was $60,000 however, due to a severe cash shortage the corporation declared a scrip dividend (resulting in a current liability) rather than an immediate cash dividend. If no other transaction occurred which would affect retained earnings, the corporation should report on December 31, retained earnings of:

• A) $160,000
• B) $40,000
• C) $60,000
• D) $20,000

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Definitions:

Diaphragm

The diaphragm is a large, dome-shaped muscle located below the lungs that plays a crucial role in the respiratory process by helping to inhale and exhale air.

Oxytocin

Sometimes referred to as the "love hormone," it plays a significant role in facilitating social bonding, trust, and group cohesion.

Small-For-Date

A term describing infants whose birth weight is significantly lower than expected for the duration of the pregnancy.

Frontal Lobes

The frontal lobes are the part of the brain located at the front of each cerebral hemisphere, responsible for complex cognitive functions, decision making, and controlling voluntary muscle movements.