QUESTION 5 On January 1, Year 2, Edward Corporation had 24,000 shares of $4 par value common stock and 24,000 shares of 7%, $100 par value convertible preferred stock outstanding. The preferred shares carried a 3-for-1 conversion privilege. On October 1, Year 2, all of the preferred shares were converted to common. What number of shares must Edward use in computing basic earnings per share at December 31, Year 2? 42,000 18,000 96,000 24,000

QUESTION 6 On September 1, Year 1, Able Company purchased a building from Regal Corporation by paying $600,000 cash and issuing a one-year note payable for the balance of the purchase price. Interest on the note is stated at an annual rate of 12% and is paid at maturity. In its December 31, Year 1, balance sheet, Able correctly presented the note and interest payable as follows: Interest payable $22,200 Notes payable, 12%, due September 1, Year 2 $555,000

What is the amount of the interest expense Able will recognize on this note in Year 2? $44,400 $22,200 $38,850 $66,600

On September 1, Year 1, Able Company purchased a building from Regal Corporation by paying $420,000 cash and issuing a one-year note payable for the balance of the purchase price. Interest on the note is stated at an annual rate of 10% and is paid at maturity. In its December 31, Year 1, balance sheet, Able correctly presented the note and interest payable as follows: Interest payable $14,000 Notes payable, 10%, due September 1, Year 2 $420,000

What is the total cash (including interest) paid for the building purchased by Able? $868,000 $840,000 $826,000 $882,000