26. Company X paid Company Y $3.25 million for a new plant. During the same accounting period, Company X experienced the following changes in its balance sheet: Cash decreased by $360,000, Accounts Receivable increased by $323,200, Inventory increased by $277,700, Property, Plant, and Equipment increased by $754,800, and Bonds Payable increased by $3 million. The net cash flow provided by financing activities is:

A. An inflow of $754,800.

B. An outflow of $360,000.

C. An inflow of $3.25 million.

D. An inflow of $3 million.

27. Why is inventory reported as a current asset?

A. Inventory is not a current asset it is a noncurrent asset because inventory is often sold on account and not for cash.

B. Inventory is not reported as a current asset.

C. Inventory is reported as a current asset because it has been sold.

D. Inventory is reported as a current asset because it will be converted into cash within a year of the balance sheet date.

29. A company had 1,300,000 shares of $10 par value common stock outstanding. The amount of additional paid-in capital is $6,500,000, and Retained Earnings is $1,950,000. The company issues a 2-for-1 stock split. The market price of the stock is $11. What is the balance in the Common Stock account after this issuance?

A. $26,000,000

B. $27,300,000

C. $13,000,000

D. $19,500,000

30. A company lends its supplier $174,000 for 3 years at a 6% annual interest rate. Interest payments are to be made twice a year. Each interest payment will be for:

A. $5,220.

B. $10,440.

C. $15,660.

D. $31,320.

32. When the amount of a contingent liability cannot be reasonably estimated but its likelihood is probable, the company should:

A. record the amount of the liability times the probability of its occurrence.

B. exclude the information about the contingent liability from its financial statements and footnotes.

C. include a description in the notes to the financial statements.

D. record the amount of the liability as a long-term liability on the balance sheet.