Question 7 a: Which type of securities owned by a company would be those that the company intends to sell within a short period of time in order to generate profits from selling them for more than the price at which they were purchased?

• c) trading securities
• d) profit securities
• e) none of the above

b:

A corporation issues 5,000 shares of common stock at a price of $20 per share. Suppose further that the par value per share of the common stock is $4. The journal entry to record this would include ________

• c) a debit to Treasury Stock for $80,000
• d) a credit to Treasury Stock for $80,000
• e) a credit to Paid-in Capital in Excess of Par Value for $80,000

c:

A corporation pays a dividend of $80,000 that it had declared three weeks earlier. The journal entry to record this would include ________.

• a) a debit to Dividends for $80,000
• c) a debit to Dividends Payable for $80,000
• e) a debit to Cash for $80,000

bonus:

Both trading securities and available-for-sale securities are reported on the balance sheet at fair value; which of the following are the correct statements regarding the reporting of unrealized holding gains and/or losses related to these two types of securities?

• a) Unrealized holding gains/losses for trading securities are reported on the income statement as part of net income; those gains/losses related to available-for-sale securities are reported on the balance sheet as a component of shareholders' equity.
• c) Unrealized holding gains/losses for both trading securities and available-for-sale securities are reported on the income statement as part of net income.