A Sawmill Paid $70,000 for Logs That Produced 200,000 Board

question 104

Multiple Choice

A sawmill paid $70,000 for logs that produced 200,000 board feet of lumber in 3 different grades and amounts as follows: Compute the portion of the $70,000 joint cost to be allocated to No. 2 Common.

• A) $0.
• B) $17,500.
• C) $23,333.
• D) $35,000.
• E) $70,000.

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Definitions:

Common Stock

A form of corporate equity ownership, representing a claim on a portion of the corporation's assets and earnings.

Stock Dividend

A dividend payment made in the form of additional shares of the company's stock rather than cash.

Par Value

The nominal or face value of a bond, stock, or coupon as indicated on a certificate or instrument.

Common Stock Dividends Distributable

A liability recognized on a company's balance sheet for dividends declared on common stock that have not yet been paid to shareholders.