Zhang Corp

question 160

Multiple Choice

Zhang Corp.owns 40% of Magnor Company's common stock.Magnor pays $97,000 in total cash dividends to its shareholders.Zhang's entry to record this transaction should include a:

• A)Debit to Dividends for $97,000.
• B)Debit to Dividends for $38,800.
• C)Debit to Long-Term investments for $97,000.
• D)Credit to Long-Term Investments for $38,800.
• E)Credit to Cash for $97,000.

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Definitions:

Par Value

Par value is a nominal or face value assigned to a share of stock or bond when it is issued, which has little significance today but was historically the legal capital of the share.

Capital Gain

The profit earned from the sale of an asset or investment exceeding its purchase price.

Paid-In Capital

The total amount of money shareholders have invested in a company through the purchase of stock, excluding any stock purchased on secondary markets.

Par Value

The nominal or face value of a bond, stock, or other financial instrument, as stated by the issuer.