Question

1. Dan Corp. issues 60,000 of $3 stated value common stock for Building. The building has a market value of $220,000 and asking price of $240,000. Paid in Capital amount is: *

a. $220,000

b. $180,000

c. $40,000

d. $20,000

2. Unearned Revenues is in the form of: *

a. A contingency that is reasonably likely to occur

b. Advanced payment by customer

c. An oral agreement

d. A standing agreement

3. On July 1, 2019, Alex Company borrows $30,000 from City Bank and signs a 4- months, 5%, $30,000 interest bearing note. On payment date the records in the books of Alex Company should be: *

a. Debit Interest Expense and credit Cash.

b. Debit Notes Payable and credit Cash

c. Debit Notes Payable and Interest Expense, credit Cash

d. Debit Interest Expense, credit Cash and Notes Payable

4. Dan Corp. issues 150,000 shares of $3 par value common stock. Journalize entry will be *

a. Debit Common Stock $450,000 and credit Cash $450,000

b. Debit Cash $150,000 and credit Common Stock $150,000

c. Debit Cash $450,000 and credit Common Stock $450,000

d. Debit Common Stock $150,000 and credit Cash $150,00

5. Issued stock: *

a. Is the total number of shares sold.

b. Is the repurchased shares.

c. Is the maximum number of shares that can be sold.

d. Is the difference between shares issued and treasury shares.

6. Boundy Company made cash sales revenue of $20,600 on June 1, 2020 plus 3% sales tax. Sales Taxes amount is: *

a. $20,600

b. $20,618

c. $618

d. $600

7. Dan Corp. issued 5,000 shares of common stock at a stated value of $5 per share, where stock was sold for $15 per share. The journal entry to record this transaction would include: *

a. Credit to Cash for $75,000

b. Credit to Common Stock for $25,000

c. Debit Paid-in Capital in Excess of Par Value for $25,000

d. Credit to Common Stock for $75,000

8. Which of the following statements is wrong? *

a. Common stock can be issued at market value equal to par value or stated value.

b. If the issuance of common stock is at a market value higher than par or stated, the difference will not be recorded as paid in capital.

c. Preferred stock can be issued at market value greater than or equal par value or stated value.

d. None of the above

9. Lili Company’s products are subject to a 1-year warranty. During 2019, the company sold 300,000 units, of which the company estimates 4% will be defective. During the year, the company honored warranty contracts for 6,000 units. If warranty expense for 2019 is $72,000, the cost to repair each unit is: *

a. $6

b. $7

c. $8

d. $9

10. Dan Corp issues 500 of 10%, $100 par value preferred stock to attorneys who helped the company organize. Attorneys valued their service at $100,000. Expense should be recorded as: *

a. Debit $100,000

b. Credit $100,000

c. Debit $50,000

d. Credit $50,000

11. A potential liability that may occur in the future *

a. Current Liability

b. Unearned Revenue

c. Working Capital

d. Contingent Liability

12. Dan Corp issues 500 of 10%, $100 par value preferred stock to attorneys who helped the company organize. Attorneys valued their service at $100,000. Paid in Capital amount is: *

a. $50,000

b. $100,000

c. $130,000

d. $230,000

13. Which of the following is classified as current liabilities? *

a. Notes receivable

b. Prepaid expenses

c. Accounts Receivables

d. Accounts Payable

14. Dan Corp issues 3,000 shares of 10%, preferred stock. The Cash amount is $450,000; in this case the market value is: *

a. $10

b. $100

c. $120

d. $150

15. On July 1, 2019, Alex Company borrows $30,000 from City Bank and signs a 4- months, 5%, $30,000 interest bearing note. Interest Expense is: *

a. $500

b. $800

c. $30,500

d. $30,800

16. Lili Company’s products are subject to a 1-year warranty. During 2019, the company sold 300,000 units, of which the company estimates 4% will be defective. During the year, the company honored warranty contracts for 6,000 units. When honoring warranty contracts, the company must *

a. Debit Warranty Liability and credit Repair Parts

b. Debit Repair Parts and credit Warranty Liability

c. Debit Warranty Expense and credit Warranty Liability

d. Debit Warranty Liability and credit Warranty Expense

17. On July 1, 2019, Alex Company borrows $30,000 from City Bank and signs a 4- months, 5%, $30,000 interest bearing note. The payment date is *

a. October 1, 2019

b. November 1, 2019

c. December 1, 2019

d. January 1, 2020

18. Dan Corp issues 500 of 10%, $100 par value preferred stock to attorneys who helped the company organize. Attorneys valued their service at $100,000. Preferred Stock should be recorded as: *

a. Debit $50,000

b. Credit $50,000

c. Debit $130,000

d. Credit $130,000

19.Which of the following represents the number of shares repurchased from the market? *

a. Treasury shares

b.Issued shares

c. Outstanding shares

d. Authorized shares

20. The sale of common stock below par: *

a. Is a common occurrence

b. Is not permitted

c. Is a practice that most shareholders encourage

d. Requires that a liability be recorded for the difference between the sales price and the par value of the shares.

Answer 1

1)

The correct answer is b) $180,000.

Supporting calculations:

The fair value of the building or the asking price of the building are irrelevant and the paid in capital will always be at the value at which shares were issued. Therefore, the value of paid in capital is $180,000 (60,000 shares * $3 per share).

Hence, the correct answer is $180,000.

Note: As per Chegg guidelines, the first question should be answered so i have answered the first question, hence, please post the remaining questions separately.

Please do not give me the negative rating for not answering all the questions as i just followed the Chegg guidelines and also it is taking more time to answer each question.