Question

1) 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

2) 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

3) 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

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) 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

6) 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

7) 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

8) 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

9) 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