Premium on Bonds Payable 3800 If the company retires the bonds for $74,150, what will be the effect on the income statement? A) gain on retirement of $6950 B) loss on retirement of S6950 C) gain on retirement of $650 D) loss on retirement of S650 15) Which of the following corporate characteristics is a disadvantage of a corporation? A) Stockholders have limited liability. B) A corporation has a continuous life. C) There is no mutual agency between the stockholders and the corporation. D) Earnings of a corporation may be subject to double taxation 16) Preferred stock is stock A) that sells for a high price B) that is distributed to employees as annual bonuses C) that is distributed by corporations to avoid liquidation D) that gives its owners certain advantages over common stockholders 17) Bentley Corporation received cash from issuing 17,000 shares of common stock at par on January 1, 2018. The stock has a par value of 0.05 per share. Which is the correct journal entry to record this transaction? A) Cash is debited for $850, and Common Stock-S0.05 Par Value is credited for 5850 B) Cash is credited for $17,000 and Common Stock-50.05 Par Value is debited for $17,000. C) Paid-In Capital in Excess of Par-Common is debited for $16,150, and Common Stock-$0.05 Par Value is credited for $16,150 D) Cash is debited for $17,000, Common Stock S0.05 Par Value is credited for $850. and Paid-In Capital in Excess of Par-Common credited for $16,150. 18) O'Malley, Inc. issued 60,000 shares of common stock in exchange for manufacturing equipment. The equipment has a fair value of S1,420,000. The stock has a par value of 0.05 per share. The journal entry to record this transaction includes a A) debit to Cash for $14,170,000 B) credit to Gain on Sale of Common Stock for $1,480,000 C) credit to Paid-In Capital in Excess of Par-Common for $1,417,000 D) credit to Common Stock-S0.05 Par Value for $1,420,000