1.On June 30, 2011 Monroe Co. purchased 75,000 shares of its $.50 par common stock in the market for $60 per share. Monroe later sold the shares on Dec. 1, 2011 when the market price was $65 per share. How will the sale on Dec. 1 affect Monroes stockholders equity?

A. Common Stock will Increase $37,500 and Additional Paid-in Capital Common Stock will increase

$4,837,500.

B. Treasury Stock will decrease $4,500,000 and Additional Paid-in Capital Treasury Stock will increase by

$375,000.

C. Treasury Stock will decrease $4,500,000 and Gain on Treasury Stock will increase $375,000.

D. Treasury Stock will decrease $4,875,000 and Revenue from Treasury Stock will increase $4,875,000.

2.The Board of Directors of Jules Corp. approved a 60% stock dividend on Nov. 15, 2011. Before the

dividend Jules had 200,000 shares of its $.25 par common stock outstanding. The market price of Jules

stock on Nov. 15 was $80. How did the stock dividend affect Jules accounting equation?

A.. Cash increased $9,600,000 and Retained Earnings decreased $9,600,000.

B. Common Stock increased $9,600,000 and Retained Earnings decreased $9,600,000.

C. Common Stock increased $30,000 and Retained Earnings decreased $30,000.

D. Retained Earnings decreased $30,000 and Dividend Expense increased $30,000.

3.On the statement of cash flows which one of the following items should not appear in the operating

section?

A Cash received from customers

B. Cash paid for employees salaries and wages.

C. Cash paid for dividends

D. Cash paid for income taxes

4.Which one of the following statements regarding LIFO and FIFO is true when prices are rising?

A. LIFO will result in the highest ending inventory.

B. LIFO will result in the lowest amount of net income.

C. FIFO will result in the highest cost of goods sold.

D. FIFO will result in lower income tax expense.