36.

Advantages of debt financing over equity financing include that:

A.	interest payments are optional.

B.	debt financing does not require repayments.

C.	interest payments are tax not deductible.

D.	stockholders' control will not be diluted.

37.

Daffy Duct, Inc. issued 10,000 shares of no-par value common stock at $10 per share. Miss Hap, the bookkeeper, recorded the transaction with a $100,000 debit to Cash and $100,000 credit to Common stock. Which of the following statements about this situation is correct?

A.	Total assets will be overstated.

B.	This entry is correct.

C.	Total stockholders' equity will be overstated.

D.	Total liabilities will be understated.

38.

Treasure This, Inc. had total assets of $100,000, total liabilities of $60,000 and stockholders' equity of $40,000 before repurchasing 1,000 shares of its $1 par value common stock for $5 per share. After this repurchase, total assets equal _____, total liabilities equal ______ and stockholders' equity equals ______:

A.	$95,000 $60,000 $35,000

B.	$100,000 $55,000 $45,000

C.	$100,000 $65,000 $35,000

D.	$105,000 $60,000 $45,000

Ferris Company reported the following on its balance sheet: total contributed capital of $186,000, treasury stock of $19,500 and total stockholder's equity of $237,500. Ferris had 1,000,000 authorized shares of its $0.01 par value common stock of which 200,000 were outstanding.

39.

Use the information above to answer the following question. What was the amount of additional paid-in capital reported in the balance sheet?

A.

$184,000

B.

$2,000

C.

$71,000

D.

$51,500

40.

A corporate charter specifies that the company may sell up to 20 million shares of stock. The company issues 12 million shares to investors and later repurchases 3 million shares. The number of issued shares after these transactions have been accounted for is:

A.	12 million shares.

B.	11 million shares.

C.	9 million shares.

D.	5 million shares.