16. A company declared a $0.50 per share cash dividend. The ueciared a $0.50 per share cash dividend. The company has 20,000 shares authorized, 9,000 shares issued and 8,000 shares of common STOCK outstanding. The journal entry to record the dividend declaration is: Retained Earings....... A 4.000 Common Dividends Payable........... 7.000 Retained Earnings 5.000 B. Common Dividends Payable 3,000 Retained Earnings 4.500 Common Dividends Payable.... 7,500 Common Dividends Payable 4.500 Cash 4,500 Common Dividends Payable 4.000 Cash 4.000 A stock dividend: A. Is not a liability on the balance sheet B. Does not reduce a corporation's assets and stockholders' equity C. Transfers a portion of equity from retained earnings to contributed capital D. Does not affect total equity, but does affect the components of equity E. All of the above 18. Companies can use stock dividends: A. To keep the market price of the stock affordable B. To provide evidence of management's confidence that the company is doing well C. To increase total equity D. Both A and B E.Items A, B and C are all reasons companies use stock dividends 1 Xtreme Sports has $100,000 of 8% noncumulative, nonparticipating, preferred stock outstanding. Xtreme Sports also has $500,000 of common stock outstanding. In the company's first year of operation, no dividends were paid. During the second year, Xtreme Sports paid cash dividends of $30,000. This dividend should be distributed as follows: A. $8,000 preferred; $22,000 common B. $0 preferred; $30,000 common C. $7,500 preferred: $22,500 common D. $15,000 preferred: $15,000 common E. $16,000 preferred: $14,000 common