Accounting Midterm 3

A share of 5% preferred stock has a par value of $30 and market value of $100. The owners of the preferred stock will receive a cash dividend of: (Round your answer to the nearest cent.) a) $1.50 per share. b) $70 per share. c) $5.00 per share. d) $30.00 per share.

a) $1.50 per share explanation : 5% x $30 = $1.50

Stockholders of a corporation directly elect the: a) board of directors b) president of the corporation c) chief financial office of the corporation d) chairperson of the board

a) board of directors

Wisconsin Bank lends Local Furniture Company $110,000 on November 1. Local Furniture Company signs a $110,000, 6%, 4-month note. The fiscal year end of Local Furniture Company is December 31. The journal entry made by Local Furniture Company on December 31 is: a) debit Interest Expense and credit Interest Payable for $1,100 b) debit Interest Payable and credit Interest Expense for $1,100 c) debit Interest Expense and credit Cash for $1,100 d) debit Interest Payable and credit Cash for $1,100

a) debit Interest Expense and credit Interest Payable for $1,100 explanation : $110,000 x 6% x 2/12 = $1,100

Treasury stock has a: a) debit balance, the opposite of other stockholders' equity accounts. b) credit balance, the same as other stockholders' equity accounts. c) credit balance, the opposite of other stockholders' equity accounts. d) debit balance, the same as other stockholders' equity accounts.

a) debit balance, the opposite of other stockholders' equity accounts.

How does the declaration of a cash dividend affect the accounting equation? a) increase to liabilities and a decrease to stockholders' equity b) increase to liabilities and a decrease to assets c) increase to assets and a decrease to liabilities d) increase to stockholders' equity and a decrease to assets

a) increase to liabilities and a decrease to stockholders' equity

If bonds are issued at a discount, it means that the: a) market interest rate is higher than the stated interest rate b) market interest rate is lower than the stated interest rate c) financial strength of the issuer is weak d) bond is convertible

a) market interest rate is higher than the stated interest rate

For cash dividends, the journal entry on the date of record is: a) non-existent. No journal entry is required on the date of record. b) debit Retained Earnings and credit Dividends Payable. c) debit Dividends and credit Cash. d) debit Dividends Payable and credit Cash.

a) non-existent. No journal entry is required on the date of record.

A company has a pending lawsuit that has a remote possibility of being settled in favor of the plaintiff who is a former employee. What should the company do? a) Nothing. b) Make a disclosure in a financial statement footnote. c) Prepare a journal entry. d) Make a note to the financial statements and prepare a journal entry.

a) nothing

The carrying amount of bonds issued at a discount is calculated by: a) subtracting discount on Bonds Payable from Bonds Payable b) subtracting the sum of Discount on Bonds Payable and Interest Payable from Bonds Payable c) subtracting Interest Payable from Bonds Payable d) subtracting Interest Expense from Bonds Payable

a) subtracting Discount on Bonds Payable from Bonds Payable

Maturities of long-term debt due within one year of the balance sheet date are reported separately from long-term debt a) true b) false

a) true

All of the following are reported as current liabilities EXCEPT: a) unearned revenues for services to be provided in 16 months b) payroll tax payable c) accounts payable d) notes payable due in 6 months

a) unearned revenues for services to be provided in 16 months

Michigan Bank lends Detroit Furniture Company $110,000 on December 1. Detroit Furniture Company signs a $110,000, 9%, 4-month note. The total cash paid for interest (only) at maturity of the note is: (Round your final answer to the nearest dollar) a) $1,100 b) $3,300 c) $6,600 d) $9,900

b) $3,300 explanation : $110,000 x 9% x 4/12 - $3,300

At January 1, 2019, the Accrued Warranty Payable is $1,000. During 2019, the company recorded Warranty Expense of $19,100. During 2019, the company replaced defective products in accordance with product warranties at a cost of $12,400. What is the Accrued Warranty Payable at December 31, 2019? a) $6,700 b) $7,700 c) $20,100 d) $19,100

b) $7,700 explanation : BB $1,000 + Warranty Expense $19,100 - Warranties Met $12,400 = $7,700

On January 1, 2019, Always Corporation issues $2,800,000, 5-year, 11% bonds for $2,720,000. Interest is paid semiannually on January 1 and July 1. Always Corporation uses the straight-line method of amortization. The company's fiscal year ends on December 31. The amount of discount amortized on July 1, 2019 is: a) $4,000. b) $8,000. c) $16,000. d) $80,000

b) $8,000 Explanation: $2,800,000 - $2,720,000 = $80,000 discount $80,000 ÷ 5 year × 6/12 = $8,000 discount amortization per period

Illinois Bank lends Lisle Furniture Company $90,00 on December 1. Lisle Furniture Company signs a $90,000, 10%. 4-month note. The total cash paid at maturity of the note is: (Round your final answer to the nearest dollar) a) $90,000 b) $93,000 c) $94,500 d) $99,000

b) $93,000 explanation : $90,000 + ($90,000 x 10% x 4/12) = $93,000

On December 31, 2021 Cornell Company has outstanding bonds payable with a face value of $800,000, premium on bonds payable of $50,000, and interest payable of $20,000. The bonds mature on January 1, 2030, and interest is payable on a semi-annual basis. What amounts will be reported in the current liabilities section and long-term liabilities section of the balance sheet for these bonds? a) Current Liabilities: $20,000; Long-term liabilities: $800,000 b) Current Liabilities: $20,000; Long-term liabilities: $850,000 c) Current Liabilities: $20,000; Long-term liabilities: $750,000 d) Current Liabilities: $0; Long-term liabilities: $870,000

b) current liabilities : $20,000; long-term liabilities : $850,000

The date on which a cash dividend becomes a legal obligation is the: a) date of record b) declaration date c) last day of the fiscal year d) payment date

b) declaration date

How does the declaration and payment of cash dividends affect the accounting equation? a) increase assets and stockholders' equity b) decrease assets and stockholders' equity c) increase assets and decrease stockholders' equity d) decrease assets and increase stockholders' equity

b) decrease assets and stockholders' equity

Which of the following is NOT considered to be an advantage of forming a corporation? a) continuous life b) government regulation c) ability to raise more capital than a partnership or proprietorship d) limited liability of stockholders for corporation debts

b) government regulation

The interest rate that investors demand for loaning their money is referred to as: a) the coupon rate of interest b) the market rate of interest c) the stated rate of interest d) the debenture rate of interest

b) the market rate of interest

Lisa Laskowski Company reports the following information at the current fiscal year end of December 31: What was the average selling price for the common stock issued? (Round your final answer to the nearest cent.) a) $0.61 per share b) $0.10 per share c) $0.71 per share d) $0.92 per share

c) $0.71 per share explanation : 98 million/0.10 = 980 million shares; Average selling price = ($600 million + $98 million)/980 million shares = $0.71 per share

Mariano Corporation sells 11,000 units of inventory during the first year of operations for $500 each. Mariano provides a one-year warranty on parts. It is estimated that 4% of the units will be defective and that repair costs are estimated to be $50 per unit. In the year of sale, warranty contracts are honored on 100 units for a total cost of $5,000. What amount will be reported as Estimated Warranty Liability at the end of the year? a) $5,000 b) $10,000 c) $17,000 d) $22,000

c) $17,000 explanation : 11,000 x 4% = 440 (440-100) x $50 = $17,000

Orlando Corporation incorporated on January 2 of the current year. During the year, Orlando had the following transactions: ∙ issued 60,000 shares of common stock at $45 per share. The par value per share is $1. ∙ purchased 4000 shares of treasury stock at $27 per share ∙ had net income of $400,000. What is the total amount of stockholders' equity as of December 31 of the current year? a) $2,808,000 b) $2,700,000 c) $2,992,000 d) $3,100,000

c) $2,992,000 explanation : (60,000 × $45 ) - (4000 × $27) + $400,000 = $2,992,000

If Cost of Goods Sold is $240,000, beginning inventory is $57,000, and ending inventory is $40,000, then the purchases from suppliers (assume all on account would be): a) $337,000 b) $257,000 c) $223,000 d) $240,000

c) $223,000 explanation : $240,000 + $40,000 - $57,000 = $223,000

Basil Company issued $610,000, 8%, 5-year bonds for 107, with interest paid annually. Assuming straight-line amortization, what is the carrying value of the bonds after one year? a) $652,700 b) $610,000 c) $644,160 d) $658,800

c) $644,160 explanation : $610,000 × 1.07 = $652,700 $652,700 - $610,000= $42,700 premium $42,700 ÷ 5 years = $8,540 reduction of premium $652,700 - $8,540 = $644,160

A bond with a face value of $80,000 and a quoted price of 104 has a selling price of: (round your final answer to the nearest dollar) a) $76,923 b) $80,000 c) $83,200 d) $88,000

c) $83,200 explanation : $80,000 x 1.04 = $83,200

On January 1, 2019, Anthony Corporation issued $1,000,000 of 6%, 5-year bonds at 98, with interest paid annually. Using the straight-line amortization method, what is the carrying value of the bonds one year later on January 1, 2020? (Round any intermediary calculations to two decimal places and your final answer to the nearest dollar.) a) $980,000 b) $992,000 c) $984,000 d) $1,016,408

c) $984,000 explanation : $1,000,000 × 0.98 = $980,000 $1,000,000 - $980,000 = $20,000 discount $20,000 ÷ 5 years = $4,000 $980,000 + $4,000 = $984,000

On December 31, Copper Corporation has the following data available: What is the leverage ratio? (Round your final answer to two decimal places.) a) 0.68 b) 1.52 c) 1.48 d) 0.37

c) 1.48 explanation : Average total assets = ($820,000 + $760,000) ÷ 2 = $790,000 Average total common stockholders' equity = ($570,000 + $500,000) ÷ 2 = $535,000 Leverage ratio = $790,000 ÷ $535,000 = 1.48%

Doug's Boat Shop, Inc. reports operating income of $260,000 and interest expense of $31,200. The average common stockholders' equity during the year was $50,000. The beginning assets balance is $115,000 and ending assets balance is $180,000. What is the leverage ratio? (Round your final answer to two decimal places.) a) 5.90 b) 9.42 c) 2.95 d) 8.89

c) 2.95 explanation : [($115,000 + 180,000)/2] / $50,000 = 2.95

Mr. Seider, a shareholder in the Greenfield Corporation, owns 2000 shares of their common stock, which represents 24% of the outstanding common stock of Greenfield Corporation. Mr. Seider receives a 5% stock dividend. After the stock dividend, what is Mr. Seider's ownership in Greenfield Corporation's common stock? a) 5% ownership b) 19% ownership c) 24% ownership d) 29% ownership

c) 24% ownership

Marvin Corporation has the following information reported on the balance sheet as of December 31 of the current year: Based on the information above, how many shares of common stock are outstanding? a) 20,000 b) 5000 c) 3000 d) 2000

c) 3000 explanation: $50,000 ÷ $10 par = 5000 shares issued 5000 shares issued - 2000 treasury shares = 3000 shares outstanding

On December 31st, Datton Inc. has cost of goods sold of $550,000, ending inventory is $102,000, beginning inventory is $120,000, and average accounting payable is $114,000. What is the accounts payable turnover? (Round your answer two decimal places) a) 4.98 b) 7.77 c) 4.67 d) 2.88

c) 4.67 explanation : $550,000 + $102,000 - $120,000 = $532,000 / $114,000 = 4.67

Frank's Boat Shop, Inc. reports operating income of $80,000 and interest expense of $15,000. The average number of shares of common stock outstanding during the year was 30,000 shares. What is the times-interest-earned ratio? (Round your final answer to two decimal places.) a) 3.87 b) 6.33 c) 5.33 d) 10.20

c) 5.33 explanation : $80,000 / $15,000 = 5.33

If a corporation issues 10,000 shares of $1 par value common stock for $9000, the journal entry would include a credit to: a) Common Stock for $9000. b) Paid-in Capital in Excess of Par—Common for $9000. c) Common Stock for $10,000. d) Retained Earnings for $10,000.

c) Common Stock for $10,000 explanation : Credit Common Stock 10,000 × $1 par value = $10,000

How do you compute the purchases from suppliers: a) Cost of goods sold + ending inventory + beginning inventory b) Cost of goods sold - ending inventory - beginning inventory c) Cost of goods sold + ending inventory - beginning inventory d) Cost of goods sold - ending inventory + beginning inventory

c) Cost of goods sold + ending inventory - beginning inventory

Peter's Computers purchased 1000 shares of its own $3 par value common stock for $92,000. As a result of this transaction: a) Peter's stockholders' equity increased $89,000. b) Peter's stockholders' equity increased $3000. c) Peter's stockholders' equity decreased $92,000. d) Peter's stockholders' equity increased $92,000.

c) Peter's stockholders' equity decreased $92,000.

Potential liabilities that depend on future events arising out of past events are called: a) long-term liabilities. b) estimated liabilities. c) contingent liabilities. d) current liabilities.

c) contingent liabilities

Clausen Company recorded the month's salary expense for employees on December 31, including $150,000 of gross pay, federal tax withholding of $36,000, and FICA tax withholding of $12,000. Clausen Company will pay employees for these wages on Jan. 10 of the subsequent year. Which of the following would be included as part of the journal entry on December 31? a) debit Salary Expense for $198,000 b) debit Employee Income Tax Payable for $36,000 c) credit Salary Payable for $102,000 d) credit FICA Tax Payable for $36,000

c) credit Salary Payable for $102,000 explanation : 150,000 - 36,000 - 12,000 = 102,000

Gruber Law Offices paid $57,000 to buy back 12,000 shares of its $1 par value common stock. The stock was sold later at a selling price of $13 per share. The journal entry to record the sale would include a: (Do not round intermediate calculations.) a) credit to Paid-in Capital from Treasury Stock Transactions $57,000. b) debit to Common Stock $57,000. c) credit to Paid-in Capital from Treasury Stock Transactions $99,000. d) credit to Common Stock $99,000.

c) credit to Paid-in Capital from Treasury Stock Transactions $99,000. explanation: Debit Cash (12,000 × $13) = $156,000; Credit Treasury Stock ($4.75 × 12,000) =$57,000; Credit Paid-in Capital from Treasury Stock Transactions ($156,000 - $57,000) = $99,000

Notes payable due in six months are reported as: a) a reduction to notes receivable on the balance sheet b) current assets on the balance sheet c) current liabilities on the balance sheet d) long-term liabilities o the balance sheet

c) current liabilities on the balance sheet

Bonds which are backed only by the goods faith of the borrower are referred to as: a) junk bonds b) uncertified bonds c) debenture bonds d) callable bonds

c) debenture bonds

Paltrowski Company issued 1 million shares of no-par common stock with a stated value of $9. The issue price was $40 per share. Which journal entry is prepared? a) debit Cash $40 million and credit Common Stock $40 million b) debit Cash $40 million, credit Common Stock $9 million and credit Paid-in Capital in Excess of Par—Common $31 million c) debit Cash $40 million, credit Common Stock $9 million and credit Paid-in Capital in Excess of Stated Value—Common $31 million d) debit Cash $40 million and credit Retained Earnings $40 million

c) debit Cash $40 million, credit Common Stock $9 million and credit Paid-in Capital in Excess of Stated Value—Common $31 million explanation : Debit Cash $54 million ($40 × 1 million); Credit Common Stock $9 × 1 million = $9 million; Credit Paid-in Capital in Excess of Stated Value-Common ($40 × 1 million) - $9 million = $31 million

Madison Bank lends Neenah Paper Company $120,000 on January 1, 2017. Neenah signs a $120,000, 10%, 6-month note. The journal entry made by Neenah on January 1, 2017 will debit: a) debit Cash for $108,000 and credit Note Payable for $108,000 b) debit Interest Expense for $12,000 and credit Cash for $12,000 c) debit Cash for $120,000 and credit Notes Payable for $120,000 d) debit Interest Expense for $12,000 and credit Interest Payable for $12,000

c) debit Cash for $120,000 and credit Notes Payable for $120,000

The journal entry to record accrued interest on a short-term note payable includes a debit to: a) debit Interest Payable and a credit to Cash b) debit Interest Expense and a credit to Cash c) debit Interest Expense and a credit to Interest Payable d) debit Interest Payable and a credit to Notes Payable

c) debit Interest Expense and a credit to Interest Payable

Grogan Company purchases inventory on account with a cost of $1,700 and a retail price of $3,400. Grogan Company uses the perpetual inventory method. What journal entry is required on the date of purchase? a) debit Purchases for $1,700 and credit Accounts Payable for $1,700 b) debit Purchases for $3,400 and credit Cash for $3,400 c) debit Inventory for $1,700 and credit Accounts Payable for $1,700 d) debit Accounts Receivable for $3,400 and credit Purchases for $3,400

c) debit Inventory for $1,700 and credit Accounts Payable for $1,700

The market interest rate is also referred to as the: a) contractual rate b) coupon rate c) effective rate d) stated rate

c) effective rate

If the market interest rate is 6%, a $10,000m 7%, 5-year bond, that pays interest semiannually would sell at an amount: a) less than face value b) equal to face value c) greater than face value d) less than the maturity value

c) greater than face value

The calculation to determine the number of outstanding shares of stock is the number of: a) treasury stock shares plus number of issued shares. b) authorized shares minus number of issued shares. c) issued shares minus number of treasury shares. d) authorized shares minus treasury shares.

c) issued shares minus number of treasury shares

According to FASB, when should a company journalize a contingent liability? a) Journalize the contingent liability, even though you will probably win the lawsuit. b) Journalize the contingent liability only if the amount can be estimated and the probability of loss is reasonably possible. c) Journalize the contingent liability if it is probable that the loss will occur, and the amount of the loss can be reasonably estimated. d) Do not journalize the contingent liability under any circumstances

c) journalize the contingent liability if it is probable that the loss will occur, and the amount of the loss can be reasonably estimated

The carrying value of a bond immediately after the bond was issued was $225,000. The bond price was 96. The face value of the bond was: (Round your final answer to the nearest dollar.) a) $216,000. b) $225,000. c) $234,000. d) $234,375.

d) $234,375 explanation : $225,000 / 0.96 = $234,375

Cubs Corporation issues $550,000, 10%, 5-year bonds on January 1, 2019 for $489,000. Interest is paid annually on January 1. If Cubs Corporation uses the straight-line method of amortization of bond discount, the amount of interest expense recorded at December 31, 2019 would be: a) $61,000. b) $42,800. c) $55,000. d) $67,200.

d) $67,200 explanation : Discount = $550,000 - $489,000 = $61,000 ($550,000 × 10%) + ($61,000 ÷ 5) = $67,200

Scott's Boat Shop, Inc. reports total assets of $352,000 and total stockholder's equity of $120,000. What is the debt ratio? (Round your final answer to two decimal places.) a) 2.93 b) 0.34 c) 1.52 d) 0.66

d) 0.66 explanation : L = A - SE Total Liabilities = 352,000 - 120,000 = 232,000 Debt ratio = 232,000/352,000 = 0.66

On December 31, Sulfur Corporation has the following data available: What is return on assets? (Round your final answer to two decimal places, X.XX%) a) 11.25% b) 15.00% c) 32.43% d) 17.50%

d) 17.50% explanation : Average assets = ($760,000 + $840,000) ÷ 2 = $800,000(Net income of $140,000) ÷ Average total assets of $800,000 =17.50%

On December 31 of the current year, Pilozzi Company has the following information available: On December 31 of the current year, can the Board of Directors declare and pay a cash dividend of $6 million? a) Yes, if they can borrow some money, or liquidate some assets. b) No, the cash balance is below $6 million. c) No, Retained Earnings is below $6 million. d) No, Cash and Retained Earnings are both below $6 million.

d) No, Cash and Retained Earnings are both below $6 million

If a corporation issues 5000 shares of $5 par value common stock for $85,000, the journal entry would include a credit to: a) Common Stock for $85,000. b) Paid-in Capital in Excess of Par—Common for $85,000. c) Common Stock for $60,000. d) Paid-in Capital in Excess of Par—Common for $60,000.

d) Paid-in Capital in Excess of Par-Common for $60,000 explanation : Credit Common Stock 5000 × $5 = $25,000; Credit Paid-in Capital in Excess of Par-Common = $85,000 - $25,000 = $60,000

Bonds that are secured by real estate are called: a) term bonds b) secured bonds c) mortgage bonds d) b and c

d) b and c

Dividends are declared by the: a) Chief Accounting Officer. b) Chief Financial Officer. c) President. d) Board of directors.

d) board of directors

The purchase of treasury stock returns ________ to the stockholders but also ________. a) stock; increases their ownership of the company. b) stock; decreases their ownership of the company. c) cash; increases their ownership of the company. d) cash; decreases their ownership of the company.

d) cash; decreases their ownership of the company.

On January 1, Hanley Corporation issued $2,300,000, 10-year, 9% bonds at 103. The journal entry to record this transaction would include a: a) credit to Bonds Payable $2,369,000. b) debit to Discount on Bonds Payable $69,000. c) debit to Cash $2,300,000. d) credit to Premium on Bonds Payable $69,000.

d) credit to Premium on Bonds Payable $69,000. explanation : $2,300,000 x 3% = $69,000

Nationwide Magazine sells 64,000 subscriptions on account in March. The subscription price is $15 each. The subscriptions start in April. The journal entry in March would include a: a) debit to Unearned Subscription Revenue for $960,000. b) debit to prepaid subscriptions for $960,000. c) credit to Cash for $960,000. d) credit to Unearned Subscription Revenue for $960,000.

d) credit to Unearned Subscription Revenue for $960,000

At the end of he year, a company makes a journal entry to accrue the interest expense on a short-term note payable. As a result of this transaction: a) current liabilities increase and current assets increase b) current liabilities increase and stockholders' equity increases c) current liabilities decrease and stockholders' equity decreases d) current liabilities increase and stockholders' equity decreases

d) current liabilities increase and stockholders' equity decreases

On December 31, 2019, Accrued Warranty Payable is reported on the balance sheet for White and Decker Company. The liability pertains to products sold, in 2019, with five-year warranties. The Accrued Warranty Payable should be reported on the balance sheet at December 31, 2019 as a: a) part of stockholders' equity. b) long-term liability only. c) current liability only. d) current liability and a long-term liability

d) currently liability and a long-term liability

The chronological order of dates for cash dividends are: a) date of record, date of declaration, date of payment. b) date of annual Board of Directors meeting, date of payment, date of record, date of declaration. c) date of annual Board of Directors meeting, date of record, date of declaration, date of payment. d) date of declaration, date of record, date of payment.

d) date of declaration, date of record, date of payment

Apple Inc. issued 4 million shares of no-par common stock for $4 million. What journal entry is prepared? a) debit Cash $4 million and credit Paid-in Capital in Excess of Par $4 million b) debit Cash $4 million and credit Retained Earnings $4 million c) debit Cash $4 million and credit Paid-in Capital in Excess of Stated Value $4 million d) debit Cash $4 million and credit Common Stock $4 million

d) debit Cash $4 million and credit Common Stock $4 million

Kathy's Corner Store has total cash sales for the month of $40,000 excluding sales taxes. If the sales tax rate is 5%, which journal entry is needed? (Ignore Cost of Goods Sold.) a) debit Cash $42,000, credit Sales revenue $42,000 b) debit Cash $40,000 and credit Sales Revenue $40,000 c) debit Cash $38,000, debit Sales Tax Receivable for $2,000 and credit Sales Revenue for $40,000 d) debit Cash $42,000, credit Sales Revenue $40,000 and credit Sales Tax Payable $2,000

d) debit Cash $42,000, credit Sales Revenue $40,000 and credit Sales Tax Payable $2,000

Sales taxes collected from customers are sent to the state at the end of each month. What journal entry is prepared? a) debit Accounts Receivable and credit Sales b) debit Sales Tax Payable and credit Sales c) debit Accounts Payable and credit Cash d) debit Sales Tax Payable and credit Cash

d) debit Sales Tax Payable and credit Cash

Kunze Corporation has $1 par value Common Stock with 100,000 shares authorized and 25,000 shares issued. The journal entry to record Kunze's purchase of 10,000 shares of common stock at $4 per share would be: a) debit Common Stock for $10,000, debit Paid-in Capital in Excess of Par—Common for 30,000 and credit Cash for $40,000. b) debit Common Stock for $40,000 and credit Cash for $40,000. c) debit Cash for $40,000, credit Common Stock for $10,000 and credit Paid-in Capital in Excess of Par—Common for $30,000. d) debit Treasury Stock for $40,000 and credit Cash for $40,000.

d) debit Treasury Stock for $40,000 and credit Cash for $40,000. explanation : Debit Treasury Stock $40,000 (10,000 shares × $4)

Smith Corporation issues $1,800,000, 10-year, 6% bonds payable at a price of 95. The journal entry to record the issuance will include a: a) debit to Cash of $1,800,000. b) credit to Discount on Bonds Payable for $90,000. c) credit to Bonds Payable for $1,710,000. d) debit to Cash for $1,710,000.

d) debit to Cash for $1,710,000 explanation : $1,800,000 x 0.95 = $1,710,000

Amber Corporation purchases 40,000 shares of its own $20 par value common stock for $80 per share. What will be the effect on stockholders' equity? a) increase $800,000 b) increase $3,200,000 c) decrease $800,000 d) decrease $3,200,000

d) decrease $3,200,000 explanation : 40,000 shares × $80 purchase price = $3,200,000

Over the term of a bond, the amortization of the premium on bonds payable: a) increases the amount of cash paid to bondholders annually. b) decreases the amount of cash paid to bondholders annually. c) increases interest expense. d) decreases interest expense.

d) decreases interest expense

Failure to record an accrued liability for wages earned by employees causes a company to: a) understate net income b) overstate assets c) overstate liabilities d) overstate stockholders' equity

d) overstate stockholders' equity

Which one of the following is NOT a stockholder's right of ownership in a corporation? a) the right to participate in management by voting on matters that come before the stockholders b) the right to receive a proportionate share of the assets remaining after all liabilities are paid upon liquidation c) the right to maintain one's proportionate share of ownership in the corporation d) the right to decide if a dividend should be distributed

d) the right to decide if a dividend should be distributed

Mr. Jorgensen, a shareholder in the Best Corporation, owns 2000 shares of its common stock. Mr. Jorgensen receives a 7% stock dividend. After the stock dividend, Mr. Jorgensen will have a: a) total of 140 shares of Best Corporation's common stock. b) total of 1860 shares of Best Corporation's common stock. c) total of 2000 shares of Best Corporation's common stock. d ) total of 2140 shares of Best Corporation's common stock.

d) total of 2140 shares of Best Corporation's common stock