QUESTION 26

Qdot International originally issued 50,000 shares of common stock at a price of $20 per share. A year later, they distributed a 10% stock dividend to shareholders. At the time of the stock dividend, the share price had gone up to $24 per share. Which of the following statements is TRUE?

		Qdot will record sales revenues of $120,000.
		Qdot will record a loss of $20,000.
		Qdot will record a gain of $20,000.
		Qdot will record neither a gain nor a loss.

3 points

QUESTION 27

On November 1, 2014, EZ Products borrowed $48,000 on a 5%, 10-year note with annual installment payments of $4,800 plus interest due on November 1 of each succeeding year. How much interest expense should be accrued at December 31, 2014 for the period of November 1 through year-end?

		$1,200
		$2,400
		$400
		$200

3 points

QUESTION 28

Which of the following is TRUE of a premium on bonds payable?

		A premium on bonds payable is added to the bonds payable balance and shown with long-term liabilities on the balance sheet.
		A premium on bonds payable is added to the bonds payable balance and shown with stockholders' equity on the balance sheet.
		A premium on bonds payable is subtracted from the bonds payable balance and shown with long-term liabilities on the balance sheet.
		A premium on bonds payable is subtracted from the bonds payable balance and shown with the current liabilities on the balance sheet.

3 points

QUESTION 29

A company has been sued for product failures allegedly resulting in injuries to the individuals bringing the lawsuit. The company's lawyers believe it is more than remote, but less than probable, that the lawsuit will result in an actual liability. Which of the following actions should be taken by the company's management?

		The liability should be estimated and recorded as an expense.
		The situation should be described in a note to the financial statements.
		The possible liability should be ignored.
		Management should consider resigning.

3 points

QUESTION 30

Which of the following represents one of the basic rights of stockholders?

		Stockholders may sell their stock back to the company if they wish.
		Stockholders may authorize a business contract on behalf of the corporation.
		Stockholders may participate in management by voting on corporate matters.
		Stockholders may determine at what price the company issues stock.