1a)

A company reported the following asset and liability balances at the end of 2018 and 2019: 2018 2019

Total assets $6,500,000 $7,400,000

Total liabilities $3,400,000 $3,600,000

During 2019, cash dividends of $80,000 were declared and paid, and common stock was issued for $100,000. What was the amount of net income for 2019?

Choose the right answer below?

A. $700,000

B. $600,000

C. $780,000

D. $680,000

1b)

Star Company issued bonds at par this year. When Star made the first cash interest payment to bondholders, the journal entry was correctly recorded as a debit to interest expense and a credit to cash. What are the financial statement effects of this journal entry?

Choose the right answer below?

A. Expenses increase and assets decrease

B. Expenses increase and liabilities increase

C. Assets decrease and liabilities decrease

D. Liabilities decrease and stockholders' equity decreases