Asked by David Thibodeaux-Benoit on May 16, 2024
Verified
Atkins Company had 20,000 shares of $5 par value common stock outstanding prior to declaring a 10% common stock dividend.The market value of the common stock on the declaration date was $11.Which of the following statements correctly describes the effect of the common stock dividend?
A) Retained earnings decreased $22,000.
B) Retained earnings decreased $10,000.
C) Total stockholders' equity decreased $22,000.
D) Total stockholders' equity decreased $10,000.
Common Stock Dividend
A portion of a company's earnings distributed to holders of its common shares, often in the form of cash or additional shares.
Retained Earnings
Profits that a company has earned to date, less any dividends or other distributions paid to shareholders.
Market Value
The estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller.
- Comprehend the financial implications and accounting processes related to dividends on common stock.
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Learning Objectives
- Comprehend the financial implications and accounting processes related to dividends on common stock.
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