1. Indigo Company can borrow up to $50,000 on its state bank line of credit. The company agrees to pay interest monthly at 2% above prime. Funds are borrowed or repaid on the first day of each month.

Month

Jan. Feb. March

Amounts Borrowed or (Repaid)

$15,000 $ (5,000) $30,000

Prime Rate

6% 5% 4%

The amount of interest to be accrued on March 31 is a. $225.00.

b. $100.00.

c. $133.33.

d. $200.00.

1. Which of the following statements concerning a two-for-one stock split is true?
2. The number of shares outstanding will decrease.
3. The market price of the stock would be expected to increase.
4. The company's equity will increase.
5. No journal entry would be necessary.

1. Which of the following cash transactions is classified as an investing activity on the statement of cash flows?
2. Cash borrowed.
3. Cash received from issuing stock.
4. Cash received from revenue.
5. Cash collected on a loan.

1. Jackson Hole, Inc., owns equipment that cost $25,000. The equipment has a four-year useful life and a $5,000 salvage value. Assuming the company uses straight-line depreciation, the amount of depreciation expense that would appear each year on the statement of cash flows presented using the direct method would be
2. a. a $5,000 cash outflow under operating activities. b. a $6,250 cash outflow under operating activities. c. a $5,000 cash outflow under investing activities. d. zero.