$1.$ PWT Inc. sells gift cards valued at $ $500,000$ during December. Based on experience, PWT estimates that $30\%$ of the gift cards will not be redeemed. Which of the following statements is true regarding accounting for this breakage?

A$.$Estimated breakage revenue is recorded at the time of the sale.

B$.$Estimated breakage revenue is recognized in proportion to gift card redemptions.

C$.$The liability for the gift cards is not adjusted for breakage.

D$.$Unearned Gift Card Revenue related to the breakage is reported as a long$-$term liability.

$2.$ When stock is split

A$.$Total number of shares will increase

B$.$Stockholders' equity will increase

C$.$Par value per share will increase

D$.$All of the above are true

$3.$ When a corporation issues its capital stock in payment for services, the LEAST appropriate basis for recording the transaction is the?

A$.$ market value of the services received.

B$.$par value of the shares issued.

C$.$market value of the shares issued.

D$.$Any of these provides an appropriate basis for recording the transaction.

$4.$ Manning Company issued $10,000$ shares of its $$5$ par value common stock having a fair value of $$25$ per share and $15,000$ shares of its $$15$ par value preferred stock having a fair value of $$20$ per share for a lump sum of $$530,000.$ How much of the proceeds would be allocated to the common stock? $($DO NOT ROUND your percentages during calculations!$)$

A$.$$$250,000$

B$.$$$240,909$

C$.$$$289,091$

D$.$$$281,563$

$5.$ Small stock dividends distribution has the following effect on the financial statements

A$.$Assets decrease

B$.$Stockholders' equity remain the same

C$.$Liabilities decrease

D$.$Stockholders' equity decrease

E$.$Contributed capital decrease

$6.$ During $2019,$ Eaton Co$.$ introduced a new product carrying a two$-$year warranty against defects. The estimated warranty costs related to dollar sales are $2\%$ within $12$ months following sale and $3\%$ in the second $12$ months following sale. Sales and actual warranty expenses for the year ended December $31,2019$ is as follows:

$2019=$ Actual Warranty$\_$expenses $=12$$ Sales $=800$$

At December $31,2019$ Eaton should report an estimated warranty liability of $($

A$.$$O$.$

B$.$$$12.$

C$.$$$28$

D$.$$$40$

$7.$ Warranty discussed in the prior question constitutes

$-$

A$.$A sales$-$type warranty.

B$.$A service$-$type warranty.

C$.$A separate contractual obligation.

D$.$An assurance$-$type warranty

E$.$An unearned revenue$-$type warranty.

$8.$ When the company issues a bond between interest payment dates, the bond holder will prepay partial interest to the company

A$.$True

B$.$False

$9.$ On March $26,2020$ Deere & Co$.$ was sued by South Dakota farmers that a design defect led to fires in some tractor models. Deere's legal counsel denied allegations and believes that the farmers would lose and damages between $$500,000$ and $$1$ million would be awarded to Deere. How would you handle this situation as an accountant at Deere & Co$.?$

A$.$As an accrued amount.

B$.$As deferred revenue.

C$.$As an account receivable with additional disclosure explaining the nature of the contingency.

D$.$As a disclosure only.

$10.$ Cash dividends are paid on the basis of the number of shares

A$.$Authorized

B$.$Issued

C$.$Outstanding

D$.$Outstanding less the number of treasury shares

E$.$Issued less the number of shares unissued

$11.$ ZZZ Co$.$ issued a $100\%$ stock dividend of its common stock which had a par value of $$10.$ At what amount should retained earnings be reduced for the additional shares issued?

A$.$Retained earnings are not affected

B$.$Par value

C$.$Fair value on the declaration date

D$.$Fair value on the payment date

E$.$Fair value on the record date