The Following Items Appeared on the Financial Statements of Morrisey

question 56

Short Answer

The following items appeared on the financial statements of Morrisey, Inc. on December 31, 2012: On September 10, 2013, when the market value of the Morrisey stock was $140, the company declared and distributed an 8% stock dividend. Indicate whether each of the following statements is true or false.
_____ a) Retained earnings would increase by $11,200 as a result of the stock dividend.
_____ b) The balance in common stock would increase by $32,000 as a result of the stock dividend.
_____ c) Total paid-in capital would be $111,200 after the dividend had been distributed.
_____ d) Total equity would not be affected by the dividend.
_____ e) Cash flow from financing activities would increase by $11,200 as a result of the stock dividend.

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Definitions:

Marginal Product (MP)

The extra output generated from increasing the quantity of a particular input by one, while keeping other inputs unchanged.

Price (P)

The cost necessary to acquire a good or service.

Value of the Marginal Product

The additional revenue generated by employing one more unit of a factor, such as labor or capital, in the production process.

Factor's Price

The payment for the use of a factor of production, such as wages for labor, rent for land, or interest on capital.