Question : 85.A large stock dividend and a stock split similar in : 1259473

 

 

85.A large stock dividend and a stock split are similar in that they both cause a:   

A. Reduction in total stockholders’ equity.

 

B. Reduction in retained earnings.

 

C. Reduction in the par value per share.

 

D. Reduction in the market price per share.

 

 

 

 

86.Supervox Corporation declared a 3-for-2 common stock split, but this transaction was erroneously recorded as a 50% common stock dividend. As a result:   

A. Retained earnings is understated.

 

B. The total dollar amount of stockholders’ equity is overstated.

 

C. The corporate records do not show the correct number of shares of common stock outstanding.

 

D. The common stock account is understated.

 

 

 

 

87.Declaration and distribution of a stock dividend cause each of the following effects except:   

A. An increase in the number of shares of stock outstanding.

 

B. A decrease in retained earnings.

 

C. A decrease in total assets of the issuing corporation.

 

D. An increase in legal capital of the issuing corporation.

 

 

 

 

88.A 2-for-1 stock split:   

A. Is accounted for in the same way as a 100% stock dividend.

 

B. Increases the number of outstanding shares of common stock, but par value per share remains the same as before the split.

 

C. Is recorded by transferring the par value of additional shares from retained earnings to the common stock account.

 

D. Should logically cause the market price per share to drop by approximately 50%.

 

 

 

 

89.When a stock dividend is declared, total stockholders’ equity will:   

A. Decrease.

 

B. Increase.

 

C. Not change.

 

D. Increase or decrease, depending upon whether it’s a small or large stock dividend.

 

 

 

 

90.A liquidating dividend:   

A. Occurs only when a company is going out of business.

 

B. Occurs when a corporation pays a dividend that exceeds the balance in the retained earnings account.

 

C. Is an expense to the corporation.

 

D. Occurs only when the corporation has a loss for the year.

 

 

 

 

91.At the beginning of the current year, Elite Corporation had 200,000 shares of $1 par common stock outstanding and had retained earnings of $4,800,000. During the year, the company earned $1,675,000, declared a 10% stock dividend when the price of stock was $28 per share, and paid a year-end cash dividend of $3 per share. (The cash dividend was paid after the stock dividend had been distributed.) What was Elite Corporation’s retained earnings at the end of the year?   

A. $5,915,000.

 

B. $5,255,000.

 

C. $5,311,000.

 

D. $3,580,000.

 

 

 

92.At the beginning of the current year, Wilson Corporation had 200,000 shares of $1 par common stock outstanding and had retained earnings of $4,800,000. During the year, the company earned $1,675,000 and paid a year-end cash dividend of $3 per share. What was Wilson Corporation’s retained earnings at the end of the year?   

A. $6,275,000.

 

B. $5,875,000.

 

C. $6,475,000.

 

D. $4,800,000.

 

 

 

93.On January 31, Village Bank had 500,000 shares of $3 par value common stock outstanding. On that date, the company declared a 10% stock dividend when the market price of the stock was $62 per share. The immediate effect of this dividend upon Village Bank was:   

A. A reduction in cash of $3,794,500.

 

B. A reduction in retained earnings of $3,100,000.

 

C. A reduction in retained earnings of $150,000.

 

D. A liability to the stockholders of $150,000.

 

 

 

94.Which of the following items would not reduce retained earnings?   

A. A common stock dividend.

 

B. A preferred stock dividend.

 

C. A cash dividend.

 

D. Cash payment of a previously declared dividend.

 

 

 

 

 

 

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