1) A company reported that its bonds with a par value of $50k and carrying value

Question

1) A company reported that its bonds with a par value of $50k and carrying value of $57k are retried for $60k cash, resulting in a loss of $3k. the amount to be reported under cash flows from financing activities is:

a) $3k

b) $60k

C) $57k

d) 0, this is an operating activity

e) 0, this is an investing activity

2) A company has 2,000 shares of $1 par value common stock and 200 shares of 5%, $110 par, noncumulative preferred stock outstanding. The balance in retained earnings at the beginning of the year was $500k. Net income for the current year was $300k. If the company paid a dividend of $2 per share on its common stock, what is the balance in retained earnings at the end of the year?

a) $800,000

b) $805,100

c) $794,900

d) 494, 900

e) 194,900

3) Use the following information to calculate net cash flow from operating activities using indirect method:

Net Income $12,300

Depreciation Expense 12,000

Payment on mortgage payable 15,000

Gain on sale of land 7,500

Increase in merchandise inventory 2,050

Increase in Accounts Receivable 6,150

Proceeds from sale of land 8,000

a) $12,700

b) $13,900

c) $20,900

d) $28,400

e) $35,900

4) common stock always carries a preference for receiving dividend over preferred stock

a) true

b) false

Explanation / Answer

1) b.$60k 2) b.$805,100 3) c.$20,900 4) false

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