2.

In December Year 4, Mill Co. began including one coupon in each package of candy that it sells and offering a toy in exchange for $.50 and two coupons. The toys cost Mill $.80 each. Eventually, 60% of the coupons will be redeemed. During December, Mill sold 110,000 packages of candy and 22,000 coupons were redeemed. In its December 31, Year 4, balance sheet, what amount should Mill report as estimated liability for coupons?

Select one:

a.

$9,900

b.

$19,800

c.

$6,600

d.

$7,920

e.

$26,400

3.

Wertz Corporation issued ten-year, 8% bonds on January 1, 2025 at a premium. During 2025, the company's accountant failed to amortize any of the bond premium. The omission of the premium amortization will

Select one:

a.

not affect net income reported for 2025.

b.

cause the bond carrying value to be overstated.

c.

cause retained earnings at the end of 2025 to be overstated.

d.

cause interest expense for 2025 to be understated.

4.

Which items decrease Retained Earnings?

Select one:

a.

Small Stock Dividends, but not Large Stock Dividends

b.

Large Stock Dividends, but not Small Stock Dividends

c.

Both Large Stock Dividends and Small Stock Dividends

d.

Neither Large Stock Dividends nor Small Stock Dividends