16. A company purchased $1,800 of merchandise on December 5. On December 7, it returned $200 worth of merchandise. On December 8, it paid the balance in full, taking a 2% discount. The amount of the cash paid on December 8 equals: A $200 B. $1,564. C. $1,568 D. $1,600 E. $1,800 17. A company has 1,000 $50 par value, 4.5% cumulative and nonparticipating preference shares and 10,000 $10 par value ordinary shares outstanding. The company paid total cash dividends of $1,000 in its first year of operation. The cash dividend that must be paid to preference shareholders in the second year before any dividend is paid to ordinary shareholders is: A. $1,000 B. $1,250. C. $2,250. D. $3,500. E. $4,500. 18. When using the indirect method to calculate and report net cash from or used in operating activities, which of the following is subtracted from profit? A. Decrease in wages payable. B. Depreciation expense. C. Amortization of intangible assets. D. Bad debts expense. E. Decrease in merchandise inventory. 19. A corporation issued 5,000 $10 par value ordinary shares in exchange for some land with a market value of $60,000. The entry to record this exchange is: A. Debit Land $60,000; credit Share Capital-Ordinary $50,000; credit Share Premium- Ordinary $10,000 B. Debit Land $60,000; credit Share Capital-Ordinary $60,000. C. Debit Land $50,000; credit Share Capital-Ordinary $50,000. D. Debit Share Capital-Ordinary $50,000; debit Share Premium-Ordinary $10,000; credit Land $60,000 E. Debit Share Capital-Ordinary $60,000; credit Land $60,000. 20. A corporation borrowed $125,000 cash by signing a 5-year, 9% installment note requiring equal annual payments each December 31 of $32,136. What journal entry would the issuer record for the first payment? Debit Interest Expense $7,136; debit Notes Payable $25,000; credit Cash $32,136. B. Debit Notes Payable $32.136; debit Interest Payable $11.250; credit Cash $43.386. C. Debit Interest Expense $11,250; debit Notes Payable $20,886; credit Cash $32,136. D Debit Notes Payable $32,136; credit Cash $32,136. E. Debit Notes Payable $11,250; credit Cash $11,250. A B. D. 12. An asset's carrying amount is $18,000 on June 30, Year 6. The asset is being depreciated at an annual rate of $3,000 on the straight-line method. Assuming the asset is sold on December 31, Year 7 for $15,000, the company should record: A. A loss on sale of $1,500. B. A gain on sale of $1,500. C. Neither a gain nor a loss is recognized on this type of transaction. D. A gain on sale of $3,000. E. A loss on sale of $3,000. 13. On March 17, Grady Company agrees to accept a 60-day, 10%, $4,500 note from Alert Company to extend the due date on an overdue account. What is the journal entry needed to record the payment of the note by Alert Company on the maturity date? A Debit Notes Payable $4,500, debit Interest Expense $75, credit Cash $4,575. Debit Notes Payable $4,500; credit Interest Expense $75, credit Cash $4,425. C. Debit Cash $4,575; credit Interest Revenue $75; credit Notes Payable $4,500. Debit Notes Payable $4,500; debit Interest Expense $112; credit Cash $4,612. E. Debit Cash $4,575; credit Interest Revenue $75; credit Notes Receivable $4,500. 14. A company borrowed $50,000 cash from the bank and signed a 6-year note at 7%. The present value of an annuity for 6 years at 7% is 4.7665. The annual annuity payments equal: A $10,489.88. B. $11,004.88. C. $50,000.00 D. $52,450.00 E. $238,325.00 15. Stojko Corporation had a net decrease in cash of $10,000 for the current year. Net cash used in investing activities was $52,000 and net cash used in financing activities was $38,000. What amount of cash was from (used in) operating activities? A $100,000 B. $(100,000). C. $80,000 D. $(80,000). E. $(10,000)
