Reference no: EM132490793

Question 1: Watson Company has provided the following data about its common stock:

1. Par value is $1 per share
2. 10,000,000 authorized shares
3. 4,363,000 shares are outstanding
4. 4,770,000 shares are issued

How many shares of treasury stock are there?

Multiple Choice

Option 1: 407,000.

Option 2: 0.

Option 3: 5,637,000.

Option 4: 5,230,000.

Question 2: Miranda Company borrowed $103,000 cash on September 1, 2019, and signed a one-year 6%, interest-bearing note payable. Assume no adjusting entries have been made during the year. Which of the following would be the required adjusting entry at the end of the December 31, 2019 accounting period?

Option A- Interest expense6,180
Interest payable 6,180

Option B- Interest expense2,060
Interest payable 2,060

Option C- Interest payable2,060
Interest expense 2,060

Option D- Notes payable103,000

Interest expense6,180

Cash 109,180

Question 3: A company purchased 3,200 shares of treasury stock for $40,200 cash. The shares were initially issued for $26,200 and had a $11,200 par value. Which of the following statements incorrectly describes the effect of the treasury stock purchase?

Multiple Choice

Option 1: Earnings per share (EPS) increases.

Option 2: Net income is unchanged.

Option 3: Total assets remain the same.

Option 4: Stockholders' equity decreases.