Question 12 (1.5 points)

Arepas, Inc. has net income for 2020 of $4,000,000 and common shares outstanding throughout the year 2020 of 500,000 (no preferred stock). If Arepas repurchases 50,000 shares on January 1, 2021 and that is the only transaction affecting the shares outstanding for 2021, what would the earnings per share be for 2021 if net income is the same as 2020?

Question 12 options:

1)

$ 8.00

2)

$ 9.00

3)

$ 8.89

4)

$ 7.00

Question 13 (1.5 points)

ABC corporation purchases an insurance policy for $3,600 that will provide coverage for 1 year and pays for it in cash on October 1, 2020 which is also the day that coverage begins. This is appropriately recorded as an asset when it was paid. On December 31, 2020 the appropriate adjusting entry for this policy (assuming no other entries have been made for the policy since October 1) will be:

Question 13 options:

1)	Debit Insurance Expense $900 credit Prepaid Insurance $900

2)	Debit Insurance Expense $600 credit Prepaid Insurance $600

3)	Debit Prepaid Insurance $900 credit Cash $900

4)	Debit Prepaid Insurance $600 credit Insurance Expense $600

Question 14 (1.5 points)

Company B purchases items that it intends to sell to customers in its retail outlets with an agreement that Company B will pay the supplier of the items 30 days from delivery. The resulting journal entry will include:

Question 14 options:

1)	A debit to inventory

2)	A credit to accounts receivable

3)	A debit to cash

4)	A credit to revenue

Question 15 (1.5 points)

Weider, Inc. purchased and received 40 baseball gloves into inventory on March 3^rd. The terms of the purchase are 2/10 Net 30. Each glove cost $25 and the total cost of shipping the gloves to Weider was $.50 per glove (discount does not apply to shipping). The journal entry to record payment for this purchase within the discount period (less than 10 days) would involve which of the following?

Question 15 options:

1)	Credit to cash

2)	Credit to accounts payable

3)	Debit to inventory

4)	Debit to purchase discounts

Question 17 (1.5 points)

Buck, Inc. sells inventory to customers with a two year embedded warranty that is not sold separately. During 2020 Buck sold 94,000 units of the products under warranty. Based on past experience Buck expects that 5% of the products will be returned for work that is covered during the 2 years and the average cost to fix these units will be $37 each. During 2021, Buck paid $94,000 total to fix returned units under warranty. This payment would result in which of the following effects in 2021?

Question 17 options:

1)	Cash would increase.

2)	Net income would decrease

3)	Expenses would increase

4)	Current liabilities would decrease