1,2,3 all

1. Blue Star Company reported the following financial information at the end of 2007: in millions Unearned revenue $240 30 Common stock at par 440 Capital in excess of par Accounts payable 1,150 Treasury stock 2.000 Retained earnings 5,160 Accrued expenses 830 Accumulated other comprehensive loss 210 Long-term debt 1.570 Calculate Blue Star's liabilities and stockholders' equity as of December 31, 2007. Liabilities Stockholders' equity A) $3.790 million $3.420 million B) $3.790 million $7,420 million C) $3,550 million $7.840 million 2. Delphi Corporation manufactures custom motorcycles. Delphi finances the motorcycles over 36 months for customers who make a minimum down payment of 10%. Historically, Delphi has experienced bad debt losses equal to 1% of sales. Delphi also provides a 24 month unlimited warranty on all new motore eles. In the past, warranty expense has averaged 3% of sales. Ignoring taxes, how does the recognition of bad debt expense and warranty expense at the time of sale affect Delphi's liabilities? Bad debt expense Warranty expense A) No effect No effect B) No effect Increase Increase Increase 3. Which of the following characteristics are required for recognition of a balance sheet asset? Characteristic #1: Future economic benefits to the firm are probable. Characteristic #2: The asset is tangible and is obtained at a cost. Characteristic #1 Characteristic #2 A) Yes Yes B) Yes No