10 5 account for stock dividends and stock splits 1 a stock dividend affects total 4351927

10.5   Account for stock dividends and stock splits

1) A stock dividend affects total shareholders' equity.

2) A stock dividend increases the shareholder's percentage of stock held.

3) A corporation may declare stock dividends when there is not enough cash to pay a cash dividend.

4) The declaration of a stock dividend:

A) creates a liability.

B) creates an asset.

C) creates a revenue.

D) does not create a liability.

E) creates an expense.

5) A stock split is recorded as a(n):

A) regular journal entry.

B) memorandum entry.

C) adjusting entry.

D) closing entry.

E) correcting entry.

6) Tammy Corporation has 350,000 common shares outstanding.  They have declared a 5% stock dividend.  The current market price of the common shares is $7.50/share.  The amount that will be debited to retained earnings on the date of declaration is:

A) $52,500.

B) $131,250.

C) $78,750.

D) $183,750.

E) $121,350.

7) Cody's Western Wear has 2,000 common shares outstanding.  During the current year, the company distributed a 10% stock dividend.  The market value of the stock at that time was $16/share.  After the distribution, should Cody's total shareholders' equity change?  If so, by how much?

8) A distribution of a corporation's own shares to its shareholders is a called a __________.

9) What are the three dates associated with a stock dividend?

Posted in Uncategorized