During Year 1, its first year of operations, Benitez Company reported sales of $260,000. At the end of Year 1, the company estimated its warranty obligation at 3% of sales. During Year 1, the company paid $3,300 cash to settle warranty claims. Which of the following statements is true?

On October 1, a corporation declared a $100,000 cash dividend to be paid on December 15 to shareholders of record on November 1. Which of the following shows the journal entry necessary on October 1?

Which of the following is considered a disadvantage of the corporate form of business?

The following information applies to Questions 45 and 46: Madison Company issued an interest-bearing note payable with a face value of $24,000 and a stated interest rate of 8% to Metropolitan Bank on August 1, Year 1. The note carried a one-year term. The principal and interest are both due on the maturity date. What is the total amount of cash (i.e., for principal and interest) that Madison will pay to Metropolitan Bank on July 31, Year 2 (at maturity)?

Questions 39 and 40 use the same information set Tupelo Company borrowed $9,600 from the State Bank on April 1, Year 1. The one-year note carried a 5% rate of interest. The principal and interest are due at maturity. What amounts would Tupelo report on its Year 2 financial statements for interest expense and cash flows from operating activities (i.e., interest paid), respectively, related to this note?

On January 1, Year 1, a corporation issued 300 shares of $10 par value common stock for $45 per share. Which of the following journal entries shows how this event would be recorded on January 1, Year 1?

On January 1, Year 1, Wayne Company issued bonds with a face value of $600,000, a 6% stated rate of interest, and a 10-year term. Interest is payable in cash on December 31 of each year. Wayne uses the straight-line method to amortize bond discounts and premiums. The bonds were issued at 102.5. What were the cash proceeds at issuance (i.e., on January 1, Year 1)?

On January 1, Year 1, Victor Company issued bonds with a $256,000 face value, a stated rate of interest of 6%, and a 5-year term to maturity. The bonds sold at 95. Interest is payable in cash on December 31 of each year. Victor uses the straight-line method to amortize bond discounts and premiums. What is the amount of interest PAID to bondholders on December 31, Year 3?

Questions 14-16 use the same set of information   On January 1, Year 1 Cantlay Company issued $50,000 of 20-year, 7% bonds. The bonds were issued at face value. Interest is payable in cash on December 31 of each year, with the first payment due December 31, Year 1. Which of the following shows the journal entry necessary to record the bond interest payment on December 31, Year 1?

Questions 17 and 18 use the same information set   On January 1, Year 1, Jones Company issued bonds with a $200,000 face value, a stated rate of interest of 7.5%, and a 5-year term to maturity. The bonds were issued at 97. Interest is payable in cash on December 31st of each year. The company amortizes bond discounts and premiums using the straight-line method. What is the amount of interest EXPENSE shown on Jones’ income statement for the year ending December 31, Year 1?