3, A $20,000, 90-day, 8% note payable was issued on November 1, 2015, Using a 36

Question

3, A $20,000, 90-day, 8% note payable was issued on November 1, 2015, Using a 360day year, what is the amount of interest expense recorded in 2016? A) $800 B) $133 C) $200 D) $267 4. Which of the following are included in paid-in capital? A) Investments by the stockholders of a corporation are included in paid-in capital B) Capital that the corporation has earned through profitable operations are included in paid-in capital C) Investments by the creditors of a corporation are included in paid-in capital D) All of the above are included in paid-in capital 5. Which of the following would occur if 35,000 shares of $10 par common stock are issued at $16.50 per share? A) Total paid-in capital increases by $350,000 B) Total paid-in capital increases by $277,500 C) Total paid-in capital decreases by $577,500 D) Total paid-in capital increases by $577,500 6. Which of the following occurs when a 2-for-1 stock split is declared? A) The balance in common stock remains the same B) The balance in common stock is reduced to half the original amount C) The balance in common stock doubles

Explanation / Answer

3) Days in 2016 nov (30-1) 29 dec 31 total days 60 interest expense to be accrued for 60 days 20,000*8%*60/360 266.6667 option d ) $267 is the answer 4) option D all of the above investment of all types is included In paid in capital 5) cash (35000*16.50) 577500 common stock 350000 paid in capital in excess of par 227500 option D total paid in capital increases by 577,500 6) option a the balance in common stock remain the same when there is stock split the shares will double and par value will be half thus no overall effect

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