A.) Echo Inc. has a workforce of 20 employees. On each payday, Echo withholds state income tax from the employees' paychecks, and must remit these amounts to the state government within 60 days. Until Echo actually remits the withheld taxes to the government, how should Echo classify the taxes withheld from employee paychecks ?

1.) As non-current liabilities

2.) As accounts receivable

3.) As investments

4.) As current liabilities

5.) As notes payable

B.) The formula for debt to equity ratio is "total liabilities divided by total equity." Carmen, Inc. has $2,000,000 in total assets and $800,000 in total liabilities. Compute Carmen's debt to equity ratio.

[Some information is missing. Before you can compute the debt to equity ratio, you must determine the missing information using a famous equation we study in class. ]

1.) 1.5 (rounded)

2.) 2.5 (rounded)

3.) 4.0 (rounded)

4.) .67 (rounded)

C.) On December 6, the Board of Directors of Bradley, Inc. declared a cash dividend of $142,000 for common stockholders. [There are no preferred stock holders.] On the date of declaration, December 6, retained earnings was reduced and a liability for dividend payable was recorded, as shown below.

Dec. 6	Debit	Credit
Retained earnings	142,000
Common dividend payable		142,000

Time passes. The dividend is actually distributed the following January 20. Select the correct journal entry that Bradley should record on January 20, the date of distribution.

1.)

	Debit	Credit
Common dividend payable	142,000
Cash		142,000

2.)

	Debit	Credit
Cash	142,000
Common dividend payable		142,000

3.)

Retained earnings	142,000
Cash		142,000

4.)

Cash	142,000
Dividend expense		142,000

5.)

	Debit	Credit
Account payable	142,000
Cash		142,000