Liability and Equity Valuations The owner of Montana Manufacturing is in the process of preparing a balance sheet at year-end and needs guidance on valuing liability and equity items for financial reporting purposes. For each of the items listed, indicate the valuation process normally used and the potential impact on financial statement analysis if an alternative measure is used:

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Book Fair Present Value Value Value a. Wages payable $ 9,000 $ 9,000 $ 9,000 b. Bonds payable 75,000 73,000 74,000 c. Common stock outstanding 4,000 45,000 50,000 d. Retained earnings 60,000 0 0 e. Deferred income taxes 15,000 0 1,000