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:

Consuming Outside

The act of purchasing and enjoying goods or services outside one’s home, such as dining at restaurants or outdoor markets.

Opportunity Cost

The sacrifice involved in not picking the subsequent preferable option at the time of decision-making.

Freight Train

A train that is used for transporting goods, cargoes, and commodities rather than passengers.

Producing

The process of creating goods or services that can be sold or used, often involving raw materials, labor, and machinery.