UNIVERSITY OF SANTO TOMAS

UST - ALFREDO M. VELAYO COLLEGE OF ACCOUNTANCY

SECOND TERM, ACADEMIC YEAR 2024-2025

CA5101- FINANCIAL ACCOUNTING & REPORTING

HO- Accounting for Corporation

Name: ________________________________________ Section: ______

MULTIPLE CHOICE - Choose the one alternative that best completes the statement or
answers the question.
1) Which of the following accounts is not reported in the stockholders' equity section of the
balance sheet?
A) Treasury Stock
B) Common Stock
C) Sales Revenue
D) Retained Earnings

2) Which of the following stages of equity financing comes last in the traditional order of
progression?
A) Investment by friends and family of the founders
B) Investment by the founders of the business
C) Initial public offering (IPO)
D) Outside investment by "angel" investors and venture capital firms

3) In terms of total sales, assets, and earnings, the dominant form of business organization is a:
A) Sole proprietorship.
B) Partnership.
C) Corporation.
D) Limited liability company (LLC).

4) All publicly held corporations are regulated by what government organization?

A) The Financial Accounting Standards Board
B) The Commission on Accounting Procedures
C) The Accounting Principles Board
D) The Securities and Exchange Commission

5) The articles of incorporation describe:

A) The nature of the firm’s business activities.
B) The shares of stock to be issued.
C) The initial board of directors.
D) All of the other answer choices are correct.

6) Which of the following statements regarding the corporate form of business is correct?
A) The disadvantages are that generating capital is difficult and that owners have limited
liability.
B) Disadvantages are that the business is subject to government regulations and double
taxation on its income.
C) One disadvantage is that ownership is easy to transfer.
D) All of the other answer choices are correct.

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7) The correct order from the smallest number of shares to the largest number of shares is:
A) Authorized, issued, and outstanding.
B) Outstanding, issued, and authorized.
C) Issued, outstanding, and authorized.
D) Issued, authorized, and outstanding.

8) Issued stock refers to the number of shares:

A) Outstanding plus treasury shares.
B) Authorized.
C) In the hands of stockholders.
D) That may be issued under state law.

9) Outstanding common stock specifically refers to stock:

A) That is performing well.
B) That has been authorized for issuance.
C) Issued plus treasury stock.
D) In the hands of stockholders.

10) The par value of common stock represents the:

A) Amount received when the stock was issued.
B) Liquidation value of a share.
C) Market value of a share of stock.
D) Legal capital per share of stock assigned when the corporation was first established.

11) If a company issues 1,000 shares of $1 par value common stock for $20 per share, which of
the following accounts would be recorded?
A) Treasury Stock
B) Dividends
C) Additional Paid-in Capital
D) Retained Earnings

12) When a company issues 25,000 shares of $1 par value common stock for $10 per share, this
issuance would be recorded as a(n):
A) Increase to Cash for $25,000.
B) Decrease to Additional Paid-in Capital for $25,000.
C) Increase to Additional Paid-in Capital for $250,000.
D) Increase to Common Stock for $25,000.

13) A company issued 15,000 shares of $1 par value stock for $20 per share. What is true about
the journal entry to record the issuance?
A) Credit Common Stock $300,000
B) Credit Cash $300,000
C) Credit Common Stock $15,000
D) Debit Additional Paid-In Capital $285,000

14) A company issues 100 shares of its $1 par value common stock for $15 per share. The
issuance would NOT have which of the following effects?
A) Increase the Cash account for $1,500.
B) Increase the Additional Paid-In Capital account for $1,400.
C) Increase the Common Stock account for $100.
D) All of the other answer choices are effects of issuing common stock.

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15) Preferred stock:
A) Is always recorded as a liability.
B) Is always recorded as part of stockholders' equity.
C) Can have features of both liabilities and stockholders' equity.
D) Is not included in either liabilities or stockholders' equity.

16) Which of the following has the lowest expected return to the investor?
A) Bonds
B) Preferred stock
C) Common stock
D) All of the answer choices have similar expected returns.

17) Which of the following financing alternatives has the highest preference for
dividends/interest payments?
A) Common stock
B) Preferred stock
C) Bonds
D) All of the other answer choices have equal preference.

18) A company issued 1,500 shares of $5 par value preferred stock for $6 per share. What is true
about the journal entry to record the issuance?
A) Credit Cash $9,000
B) Credit Preferred Stock $9,000
C) Credit Additional Paid-In Capital $1,500
D) Debit Preferred Stock $9,000

19) A company issued 1,000 shares of $1 par value preferred stock for $5 per share. What is true
about the journal entry to record the issuance?
A) Debit Preferred Stock $5,000
B) Credit Cash $5,000
C) Credit Preferred Stock $5,000
D) Credit Additional Paid-In Capital $4,000

20) Surf's Up, Incorporated issues 1,000 shares of 6%, $100 par value preferred stock at the
beginning of 2023. All remaining shares are common stock. The company was not able to
pay dividends in 2023, but plans to pay dividends of $18,000 in 2024.

Assuming the preferred stock is noncumulative, how much of the $18,000 dividend will be
paid to preferred stockholders and how much will be paid to common stockholders in 2024?
A) $6,000 to preferred stockholders and $12,000 to common stockholders
B) $18,000 to preferred stockholders and $0 to common stockholders
C) $12,000 to preferred stockholders and $6,000 to common stockholders
D) $9,000 to preferred stockholders and $9,000 to common stockholders

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21) California Adventures issues 5,000 shares of 8%, $100 par value preferred stock at the
beginning of 2023. All remaining shares are common stock. The company was not able to
pay dividends in 2023, but plans to pay dividends of $100,000 in 2024.

Assuming the preferred stock is noncumulative, how much of the $100,000 dividend will
be paid to preferred stockholders and how much will be paid to common stockholders in
2024?
A) $40,000 to preferred stockholders and $60,000 to common stockholders
B) $80,000 to preferred stockholders and $20,000 to common stockholders
C) $20,000 to preferred stockholders and $80,000 to common stockholders
D) $100,000 to preferred stockholders and $0 to common stockholders

22) When treasury stock is resold at a price above cost:

A) A gain is reported.
B) A loss is reported.
C) A revenue account is increased.
D) Additional Paid-in Capital is increased.

23) When an investment is made in another corporation’s common stock, what is the effect on
total stockholders' equity?
A) Decrease
B) Increase
C) No effect
D) Cannot determine from the given information

24) The Treasury Stock account:

A) Normally is reported in the income statement.
B) Decreases stockholders' equity.
C) Is recorded as an investment.
D) Increases stockholders' equity.

25) Which of the following is true regarding the accounting for treasury stock?
A) Treasury stock is reported on the balance sheet in the equity section.
B) The purchase and sale of treasury stock has no impact on the income statement.
C) Treasury stock represents a negative equity account.
D) All of the other answer choices are correct.

26) The corporation's own stock that has been issued and then bought back by the company is
referred to as:
A) Preferred Stock.
B) Authorized Stock.
C) Treasury Stock.
D) Common Stock.

27) The purchase of treasury stock can boost earnings per share by:
A) Increasing the number of shares outstanding.
B) Increasing profits.
C) Reducing the number of shares outstanding.
D) Decreasing the company’s obligation to pay dividends.

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28) When treasury stock is sold for more than the company originally paid to purchase the
shares, the difference:
A) Increases net income.
B) Increases stockholders' equity.
C) Has no effect on net income or stockholders' equity.
D) Decreases net income and decreases stockholders' equity.

29) On December 2, Coley Corporation acquired 1,600 shares of its $3 par value common stock
for $22 each.

On December 20, Coley Corporation resold 1,200 shares for $11 each. Which of the
following is correct regarding the journal entry for the resold shares?
A) Credit Treasury Stock $13,200
B) Credit Additional Paid-in Capital $9,600
C) Debit Cash $17,600
D) Credit Treasury Stock $26,400

30) On December 2, Coley Corporation acquired 1,000 shares of its $2 par value common stock
for $27 each.

On December 20, Coley Corporation resold 400 shares for $15 each. Which of the following
is correct regarding the journal entry for the resold shares?
A) Debit Cash $15,000
B) Credit Treasury Stock $10,800
C) Credit Additional Paid-in Capital $5,200
D) Credit Treasury Stock $6,000

31) A company acquires 1,000 shares of its own $1 par common stock for $15 per share. This
purchase would be recorded with a:
A) Credit to Treasury Stock for $1,000.
B) Debit to Additional Paid-in Capital for $14,000.
C) Credit to Treasury Stock for $15,000.
D) Debit to Treasury Stock for $15,000.

32) On February 22, Brett Corporation acquired 180 shares of its $5 par value common stock for
$24 each. On March 15, the company resold 64 shares for $29 each. What is true of the entry
for reselling the shares?
A) Credit Cash $1,536
B) Credit Additional Paid-in Capital $320
C) Credit Treasury Stock $1,856
D) Debit Treasury Stock $1,536

33) On February 22, Brett Corporation acquired 200 shares of its $5 par value common stock for
$25 each. On March 15, the company resold 70 shares for $30 each. What is true of the entry
for reselling the shares?
A) Credit Cash $1,750
B) Credit Additional Paid-in Capital $350
C) Debit Treasury Stock $1,750
D) Credit Treasury Stock $2,100

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34) The Retained Earnings balance reported in the balance sheet typically isnot affected by:
A) Net income.
B) Net loss.
C) Dividends paid.
D) Stock splits.

35) The balance of Retained Earning at the end of the year represents:
A) Current year's profits less payments to owners.
B) Total earnings less payments to owners over the life of the company.
C) Total contributions from owners less withdrawals over the life of the company.
D) Total earnings over the life of the company.

36) Cash dividends are recorded on the:

A) Declaration date, record date, and payment date.
B) Record date and payment date.
C) Declaration date and payment date.
D) Declaration date and record date.

37) The board of directors of Capstone Incorporated declared a $0.70 per share cash dividend on
its $3 par common stock. On the date of declaration, there were 41,000 shares authorized,
19,000 shares issued, and 7,000 shares held as treasury stock.

What is the entry when the dividends are declared?

Transection Account Title Debit Credit
A. Dividends 8,400

A. Dividends Payable 8,400

B. Dividends 8,400

B. Cash 8,400

C. Dividends 28,700

C. Dividends Payable 28,700

D. Dividends 13,300

D. Cash 13,300

A) Option D
B) Option C
C) Option B
D) Option A

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38) The board of directors of Capstone Incorporated declared a $0.60 per share cash dividend on
its $1 par common stock. On the date of declaration, there were 50,000 shares authorized,
20,000 shares issued, and 5,000 shares held as treasury stock.

What is the entry when the dividends are declared?

Transection Account Title Debit Credit

A. Dividends 9,000

A. Dividends Payable 9,000

B. Dividends 9,000

B. Cash 9,000

C. Dividends 12,000

C. Dividends Payable 12,000

D. Dividends 12,000

D. Cash 12,000

A) Option A
B) Option B
C) Option C
D) Option D

39) The following amounts represent totals from the first three years of operations. Calculate the
balance of Retained Earnings at the end of 2024.

2022 2023 2024

Net Income (loss) $1,200 $(500) $2,300

Net Cash Flows $500 $300 $2,800
Dividends $200 $0 $200
Issuance of Stock $2,000 $0 $0
A) $2,600
B) $4,600
C) $3,100
D) $3,500

40) Over the first four years of the company's life, the company earned the following net income
(loss): $5,000; $3,000; $6,000, and $(2,000). If the company's ending retained earnings is
$7,200 after year 4, what is the average amount of dividends paid per year?
A) $4,800
B) $1,200
C) $12,000
D) $0

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41) The adjusting entry required to record accrued expenses includes:
A) A credit to Cash.
B) A debit to an asset.
C) A credit to an asset.
D) A credit to liability.

42) On July 1, 2024, Charlie Company paid $18,000 to Rent-An-Office for rent covering 18
months from July 2024 through December 2025. What adjusting entry should Charlie
Company record on December 31, 2024?
A) Debit Rent Expense and credit Cash for $18,000
B) Debit Rent Expense and credit Prepaid Rent for $18,000
C) Debit Prepaid Rent and credit Rent Expense for $6,000
D) Debit Rent Expense and credit Prepaid Rent for $6,000

43) On May 1, 2024, Dooley borrowed $250,000 from Prime Bank by signing a three-year, 6%
note payable. Interest is due each May 1. What adjusting entry, if any, should Dooley record
on December 31, 2024?
A) Debit Interest Expense and credit Interest Payable for $5,000
B) Debit Interest Expense and credit Interest Payable for $10,000
C) Debit Interest Expense and credit Interest Payable for $15,000
D) No adjusting entry is necessary

44) When a company makes an end-of-period adjusting entry, which includes a debit to Supplies
Expense, the usual credit entry is made to:
A) Accounts Payable.
B) Supplies.
C) Cash.
D) Retained Earnings.

45) Savory Foods purchased a one-year hazard insurance policy on August 1 and recorded the
$4,200 premium to prepaid insurance. At its December 31 year-end, Savory Foods would
record which of the following adjusting entries?
A) Debit Insurance Expense and credit Prepaid Insurance for $1,750
B) Debit Prepaid Insurance and credit Insurance Expense for $1,750
C) Debit Insurance Expense and credit Accounts Payable for $4,200
D) Debit Insurance Expense and credit Prepaid Insurance for $2,450

46) A company purchased $270,000 in supplies during the year. The supplies account increased
by $10,000 during the year to an ending balance of $66,000. For what amount was the
adjusting entry to supplies expense?
A) $300,000
B) $280,000
C) $260,000
D) $240,000

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47) A company owes employee salaries of $16,000 at the end of the year. These salaries will be
paid in the following year. What adjusting entry, if any, does the company need to record at
the end of the year?
A) Debit Salaries Expense and credit Cash for $16,000
B) Debit Salaries Expense and credit Salaries Payable for $16,000
C) Debit Salaries Payable and credit Salaries Expense for $16,000
D) No adjusting entry is necessary at the end of the year

48) A company has a policy of paying salaries for contract labor on the 15th of the month
following the labor services received. In December 2024, the company recorded $15,000
paid in salaries for labor services received in November 2024. In addition, labor services
received in December 2024 were $12,000 and will be paid by the company on January 15,
2025. What adjusting entry will the company record on December 31, 2024?
A) Debit Salaries Expense and credit Salaries Payable for $27,000
B) Debit Salaries Expense and credit Cash for $15,000
C) Debit Salaries Expense and credit Salaries Payable for $12,000
D) Debit Salaries Expense and credit Salaries Payable for $3,000

49) On September 1, 2024, Greenwood Gaming sold 400 one-year subscriptions to its online
gaming website for $90 each. The total amount received was credited to Deferred Revenue.
What would be the required adjusting entry at December 31, 2024?
A) Debit Deferred Revenue and credit Service Revenue for $36,000
B) Debit Service Revenue and credit Deferred Revenue for $24,000
C) Debit Deferred Revenue and credit Service Revenue for $24,000
D) Debit Deferred Revenue and credit Service Revenue for $12,000

50) At the beginning of December, Coastal Corporation had $1,900 in supplies on hand. During
the month, supplies purchased amounted to $3,300, but by the end of the month the supplies
balance was only $1,700. What is the appropriate month-end adjusting entry?
A) Debit Cash $3,500, credit Supplies $3,500
B) Debit Supplies $3,500, credit Supplies Expense $3,500
C) Debit Supplies Expense $3,500, credit Supplies $3,500
D) Debit Cash $1,700, credit Supplies $1,700

51) At the beginning of December, Coastal Corporation had $2,000 in supplies on hand. During
the month, supplies purchased amounted to $3,000, but by the end of the month the supplies
balance was only $800. What is the appropriate month-end adjusting entry?
A) Debit Cash $4,200, credit Supplies $4,200
B) Debit Supplies $4,200, credit Supplies Expense $4,200
C) Debit Supplies Expense $4,200, credit Supplies $4,200
D) Debit Cash $800, credit Supplies $800

52) On October 1, 2024, a company purchases equipment for $72,000. The equipment is
expected to be used for the next four years (48 months), and have no resale or scrap value at
the end of the four years. What adjusting entry should the company record on December 31,
2025?
A) Debit Depreciation Expense and credit Accumulated Depreciation for $13,500
B) Debit Depreciation Expense and credit Accumulated Depreciation for $18,000
C) Debit Depreciation Expense and credit Accumulated Depreciation for $22,500
D) Debit Depreciation Expense and credit Accumulated Depreciation for $4,500

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53) A company provides maintenance services to customers. The company's policy is to provide
services and then bill customers on the 10th of the following month. In December 2024, the
company provided services of $14,000 and plans to bill customers on January 10, 2025.
What adjusting entry, if any, will the company record on December 31, 2024?
A) Debit Accounts Receivable and credit Deferred Revenue for $14,000
B) Debit Accounts Receivable and credit Service Revenue for $14,000
C) Debit Service Revenue and credit Accounts Receivable for $14,000
D) No adjusting entry is necessary at the end of the year.

54) Prior to adjusting entries, Salaries Expense had a balance of $22,300. The following year-end
adjusting entry was made by the company:

Account Title Debit Credit

Salaries Expense 4,400

Salaries Payable 4,400

What balance would be shown for Salaries Expense in the adjusted trial balance?
A) $4,400
B) $17,900
C) $22,300
D) $26,700

55) Jeannie’s Apples opened for business on January 1, 2024, and paid for two insurance policies
effective on that date. The liability policy was $63,000 for 18 months, and the crop damage
policy was $19,200 for a two-year term. What was the balance in Jeannie’s Prepaid Insurance
account as of December 31, 2024?
A) $51,600
B) $82,200
C) $30,600
D) $9,600

56) Jeannie’s Apples opened for business on January 1, 2024, and paid for two insurance policies
effective on that date. The liability policy was $36,000 for 18 months, and the crop damage
policy was $12,000 for a two-year term. What was the balance in Jeannie’s Prepaid Insurance
account as of December 31, 2024?
A) $9,000
B) $18,000
C) $30,000
D) $48,000

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57) A company’s accountant is trying to prepare an adjusted trial balance from the list of
accounts below.

Cash $ 12,000
Retained Earnings 31,000
Prepaid Rent 2,000
Salaries Expense 15,000
Equipment 68,000
Service Revenue 40,000
Miscellaneous Expense 10,000
Supplies 4,000
Dividends 3,000
Accounts Payable 5,000
Common Stock 38,000
What is the total amount of the credit column in the adjusted trial balance?
A) $111,000
B) $81,000
C) $114,000
D) $86,000

58) If a company incorrectly records a prepayment as an expense instead of an asset, how will
this error affect net income in the current period?
A) Net income will be too low.
B) Net income will be correct.
C) Net income will be too high.
D) Not possible to determine.

59) In the statement of stockholders' equity, Retained Earnings had a beginning balance of
$25,000. During the period, the company reports a net income of $10,000 and a dividend of
$4,000. The ending balance in the Retained Earnings account is:
A) $10,000.
B) $35,000.
C) $39,000.
D) $31,000.

60) In the statement of stockholders' equity, the balance of Retained Earnings increased by
$32,000. The company declared a dividend of $10,000 during the year. What was the net
income for the year?
A) $10,000
B) $32,000
C) $42,000
D) $22,000

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61) The following financial information is from Mustang Company. All debt is due within one
year unless stated otherwise.

Retained Earnings $ 68,000

Supplies 39,000
Equipment 73,700
Accounts Receivable 10,000
Deferred Revenue 4,400
Accounts Payable 13,600
Common Stock 23,300
Notes Payable (due in 18 months) 31,000
Interest Payable 6,200
Cash 23,800
What is the amount of current liabilities?
A) $24,200
B) $19,800
C) $13,600
D) $55,200

62) The following financial information is from Mustang Company. All debt is due within one
year unless stated otherwise.

Retained Earnings $ 52,000

Supplies 37,000
Equipment 72,000
Accounts Receivable 8,600
Deferred Revenue 6,000
Accounts Payable 15,000
Common Stock 25,000
Notes Payable (due in 18 months) 35,000
Interest Payable 7,000
Cash 22,400
What is the amount of current liabilities?
A) $63,000
B) $28,000
C) $45,600
D) $22,000

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63) The following table contains financial information for Dillon Incorporated before closing
entries:

Cash $ 12,800
Supplies 5,000
Prepaid Rent 3,000
Salaries Expense 6,000
Equipment 66,100
Service Revenue 29,100
Miscellaneous Expense 20,200
Dividends 3,000
Accounts Payable 4,300
Common Stock 67,500
Retained Earnings 15,200
What is the amount of Dillon's total assets?
A) $20,800
B) $83,900
C) $86,900
D) $154,400

64) The following table contains financial information for Dillon Incorporated before closing
entries:

Cash $ 12,000
Supplies 4,500
Prepaid Rent 2,000
Salaries Expense 4,500
Equipment 65,000
Service Revenue 30,000
Miscellaneous Expense 20,000
Dividends 3,000
Accounts Payable 5,000
Common Stock 68,000
Retained Earnings 8,000

What is the amount of Dillon's total assets?

A) $81,500
B) $82,500
C) $68,500
D) $83,500

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65) The following table contains financial information for Dillon Incorporated before closing
entries:

Cash $ 12,000
Supplies 4,500
Prepaid Rent 2,000
Salaries Expense 4,500
Equipment 65,000
Service Revenue 30,000
Miscellaneous Expense 20,000
Dividends 3,000
Accounts Payable 5,000
Common Stock 68,000
Retained Earnings 8,000

What is the amount of Dillon's total stockholders' equity?

A) $5,000
B) $78,500
C) $68,500
D) $83,500

66) Providing services to customers on account would affect the balances reported in which
financial statement(s)?
A) Income statement
B) Statement of stockholders' equity
C) Balance sheet
D) All of the financial statements in the other answer choices would be affected.

67) When a company owes employee salaries at the end of the period but fails to make an
adjusting entry for that amount owed, which of the following is true?
A) Net income in the income statement is overstated.
B) Retained earnings in the statement of stockholders' equity is overstated.
C) Total stockholders' equity in the balance sheet is overstated.
D) All of the other answers are correct.

68) The Retained Earnings account had a beginning credit balance of $26,700. During the period,
the business had a net loss of $12,350, and the company paid dividends of $8,550. The
ending balance in the Retained Earnings account is:
A) $39,050
B) $14,350
C) $30,500
D) $5,800

69) The Retained Earnings account had a beginning credit balance of $26,000. During the period,
the business had a net loss of $12,000, and the company paid dividends of $8,000. The
ending balance in the Retained Earnings account is:
A) $6,000
B) $30,000
C) $22,000
D) $14,000

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70) For the first three years of operations, the company reports net income of $1,000, $2,000, and
$3,000, and pays dividends of $500, $1,000, and $1,000. What is the balance of Retained
Earnings at the end of the third year?
A) $2,000
B) $2,500
C) $3,500
D) $6,000

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Answer Key
Test name: HO-Module 6- Corporation

1) C
2) C
3) C
4) D
5) D
6) B
7) B
8) A
9) D
10) D
11) C
The journal entry would be:
Account Title Debit Credit
Cash 20,000

Common Stock 1,000

Additional Paid-in Capital 19,000

12) D
The journal entry would be:
Account Title Debit Credit
Cash 250,000

Common Stock 25,000

Additional Paid-in Capital 225,000

13) C
The journal entry would be:
Account Title Debit Credit
Cash 300,000

Common Stock 15,000

Additional Paid-in Capital 285,000

14) D
15) C
16) A
17) C
18) C

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The journal entry would be:
Account Title Debit Credit
Cash 9,000

Preferred Stock 7,500

Additional Paid-in Capital 1,500

19) D
The journal entry would be:
Account Title Debit Credit
Cash 5,000

Preferred Stock 1,000

Additional Paid-in Capital 4,000

20) A

Preferred dividends in arrears from 2023 are lost $ 0

Preferred dividends for 2024 (1,000 shares × 6% × $100 6,000
par value)
Remaining dividends to common stockholders 12,000
Total dividends $18,000

21) A

Preferred dividends in arrears from 2023 are lost $ 0

Preferred dividends for 2024 (5,000 shares × 8% × $100 40,000
par value)
Remaining dividends to common stockholders 60,000
Total dividends $100,000

22) D
23) C
24) B
25) D
26) C
27) C
28) B
29) D
The journal entry for the resold shares would be:
Account Title Debit Credit
Cash (1,200 × $11) 13,200

Additional Paid-in Capital 13,200

Treasury Stock (1,200 × $22) 26,400

30) B

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The journal entry for the resold shares would be:
Account Title Debit Credit
Cash (400 × $15) 6,000

Additional Paid-in Capital 4,800

Treasury Stock (400 × $27) 10,800

31) D
The entry for the purchase of Treasury Stock would be:
Account Title Debit Credit
Treasury Stock 15,000

Cash 15,000

32) B
The entry to resell the shares would be:
Account Title Debit Credit
Cash (64 × $29) 1,856

Treasury Stock (64 × $24) 1,536

Additional Paid-in Capital 320

33) B
The entry to resell the shares would be:
Account Title Debit Credit
Cash (70 × $30) 2,100

Treasury Stock (70 × $25) 1,750

Additional Paid-in Capital 350

34) D
35) B
36) C
37) D

Account Title Debit Credit

Dividends [(19,000 − 7,000) × $0.70] 8,400

Dividends Payable 8,400

38) A

Account Title Debit Credit

Dividends [(20,000 − 5,000) × $0.60] 9,000

Dividends Payable 9,000

39) A

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($1,200 − $500 + $2,300) − $200 − $200 = $2,600.

40) B
($5,000 + $3,000 + $6,000 − $2,000) = $12,000 − $7,200 = $4,800/4 = $1,200.

41) D
42) D
2024 Rent Expense = ($18,000/18 months) × 6 months = $6,000.

43) B
$250,000 × 6% × 8/12 = $10,000.

44) B
45) A
$4,200/12 months = $350 per month. $350 × 5 months = $1,750

46) C
$56,000 + $270,000 − $66,000 = $260,000.

47) B
48) C
49) D
$90/12 months = $7.50 per month. $7.50 × 4 months × 400 subscriptions = $12,000

50) C
Beginning supplies ($1,900) + purchases ($3,300) − ending supplies ($1,700) = $3,500.

51) C
Beginning supplies ($2,000) + purchases ($3,000) − ending supplies ($800) = $4,200

52) B
2025 Depreciation Expense = ($72,000/48 months) × 12 months = $18,000

53) B
54) D
$22,300 + $4,400 = $26,700.

55) C
Prepaid liability insurance: $63,000 × 6/18 = $21,000.
Prepaid crop insurance: $19,200 × 12/24 = $9,600.
$21,000 + $9,600 = $30,600.

56) B
Prepaid liability insurance: $36,000 × 6/18 = $12,000.
Prepaid crop insurance: $12,000 × 12/24 = $6,000.
$12,000 + $6,000 = $18,000.

57) C
Retained Earnings ($31,000) + Service Revenue ($40,000) + Accounts Payable ($5,000) +
Common Stock ($38,000) = $114,000.

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58) A
Incorrectly recording a prepayment as an expense instead of an asset will understate assets and
overstate expenses. The overstatement of expenses will understate net income.

59) D
Beginning Retained Earnings ($25,000) + Net Income ($10,000) − Dividends ($4,000) = Ending
Retained Earnings.

60) C
Increase in Retained Earnings ($32,000) = Net Income − Dividends ($10,000).

61) A
Deferred Revenue ($4,400), Accounts Payable ($13,600), and Interest Payable ($6,200) are
normally current liabilities.

62) B
Deferred Revenue ($6,000), Accounts Payable ($15,000), and Interest Payable ($7,000) are
normally current liabilities.

63) C
Assets include Cash ($12,800), Supplies ($5,000), Prepaid Rent ($3,000), and Equipment
($66,100).

64) D
Assets include Cash ($12,000), Supplies ($4,500), Prepaid Rent ($2,000), and Equipment
($65,000).

65) B
Total stockholders' equity includes common stock plus (ending) retained earnings. Common
stock is $68,000. Ending retained earnings = beginning retained earnings ($8,000) plus revenues
($30,000) less expenses ($24,500) less dividends ($3,000) = $10,500. Total stockholders' equity
= $68,000 + $10,500 = $78,500.

66) D
67) D
68) D
Beginning Retained Earnings ($26,700) − Net Loss ($12,350) − Dividends ($8,550) = Ending
Retained Earnings ($5,800).

69) A
Beginning Retained Earnings ($26,000) − Net Loss ($12,000) − Dividends ($8,000) = Ending
Retained Earnings ($6,000).

70) C
Beginning Retained Earnings ($0) + Net Income ($1,000 + $2,000 + $3,000) − Dividends ($500
+ $1,000 + $1,000) = Ending Retained Earnings ($3,500)

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