1)Dan Corp issues 500 of 10%, $200 par value preferred stock to attorneys who helped the company organize. Attorneys valued their service at $130,000. Preferred Stock should be recorded as: *

Debit $100,000

Credit $100,000

Debit $130,000

Credit $130,000

2)Boundy Company made cash sales revenue of $15,450 on June 1, 2020 plus 3% sales tax. Sales Taxes amount is: *

$450

$463.5

$15,000

$15,463.5

3)The sale of common stock below par: *

Is a common occurrence

Is a practice that most shareholders encourage

Is not permitted

Requires that a liability be recorded for the difference between the sales price and the par value of the shares.

4)Warranty Liability is in the form of: *

A contingency that is reasonably likely to occur

An oral agreement

A standing agreement

A written promissory note

5)Which of the following statements is right? *

If the issuance of common stock is at a market value higher then par or stated, the difference will be debited as paid in capital.

Common stock cannot be issued at market value equal to par value or stated value.

Common stock can be issued at market value only equal to par value or stated value.

Common stock can be issued at market value greater than par value or stated value.

6)Dan Corp issues 3,000 shares of 10%, $100 par value preferred stock. The cash amount paid is $330,000, in this case the market value is: *

$10

$100

$110

$150

7)Liabilities that are cannot be measured exactly, are known as: *

Current Liabilities

Unearned Revenue

Working Capital

Estimated Liability

8)Dan Corp. issues 50,000 shares of $5 par value common stock. Journalize entry will be *

Debit Cash $50,000 and credit Common Stock $50,000

Debit Common Stock $50,000 and credit Cash $50,00

Debit Common Stock $250,000 and credit Cash $250,000

Debit Cash $250,000 and credit Common Stock $250,000

9)Which of the following is not classified as current liabilities? *

Notes payable

Bonds Payable

Warranty Liability

Sales Taxes Payable

10)Dan Corp. issued 5,000 shares of common stock at a stated value of $10 per share. The total issue of stock sold for $15 per share. The journal entry to record this transaction would include: *

Credit to Preferred Stock for $50,000

Credit to Paid-in Capital in Excess of Par Value for $25,000

Credit to Common Stock for $75,000

Debit to Cash for $75,000

11)Dan Corp issues 500 of 10%, $200 par value preferred stock to attorneys who helped the company organize. Attorneys valued their service at $130,000. Expense amount is: *

Debit $130,000

Credit $130,000

Credit $100,000

Debit $100,000

12)On August 31, 2019, Alex Company borrows $36,000 from City Bank and signs a 4- months, 8% $36,000 interest bearing note. On August 31, 2019, the records in the books of Alex Company should be: *

Debit Interest Expense and credit Cash.

Debit Notes Payable and credit Cash

Debit Cash and credit Accounts Payable

Debit Cash and credit Notes Payable.

13)Dan Corp. issues 60,000 of $3 stated value common stock for Land. The Land has a market value of $240,000 and asking price of $260,000. Paid in capital in excess of stated amount is: *

$220,000

$180,000

$60,000

$20,000

14)On August 31, 2019, Alex Company borrows $36,000 from City Bank and signs a 4- months, 8% $36,000 interest bearing note. The payment date is *

December 31, 2019

October 31, 2019

November 30, 2019

January 31, 2020

15)On August 31, 2019, Alex Company borrows $36,000 from City Bank and signs a 4- months, 8% $36,000 interest bearing note. Interest Expense amount to be paid is: *

$800

$960

$36,000

$36,960

16)Dan Corp issues 500 of 10%, $200 par value preferred stock to attorneys who helped the company organize. Attorneys valued their service at $130,000. Paid in capital in excess of par amount is: *

$30,000

$100,000

$130,000

$230,000

17)Which of the following represents the largest number of common shares? *

Treasury shares

Authorized shares

Issued shares

Outstanding shares

18)Lili Companys products are subject to a 1-year warranty. During 2019, the company sold 100,000 units, of which the company estimates 6% will be defective. During the year, the company honored warranty contracts for 4,000 units. When honoring warranty contracts, the company must *

Debit Repair Parts and credit Warranty Liability

Debit Warranty Expense and credit Warranty Liability

Debit Warranty Liability and credit Repair Parts

Debit Warranty Liability and credit Warranty Expense

19)Outstanding stock: *

Is the total number of shares sold.

Is the repurchased shares.

Is the maximum number of shares that can be sold.

Is the difference between shares issued and treasury shares.

20)Lili Companys products are subject to a 1-year warranty. During 2019, the company sold 100,000 units, of which the company estimates 6% will be defective. During the year, the company honored warranty contracts for 4,000 units. If warranty expense for 2019 is $54,000, the cost to repair each unit is: *

$6

$7

$8

$9