A firm has 1,000 shares of common stock outstanding with a par value of $15 per share. Upon liquidation, the firm has insufficient funds and requires an additional $5,000 to repay its creditors. Which of the following statements is true about the shareholders' financial obligation?
A. If the share is purchased for $8, then the stockholders are obligated pay $2 per share to the creditors.
B. If the share is purchased for $20, then the stockholders are obligated pay an interest of $15 per share to the firm.
C. If the share is purchased for $15, then the stockholders are obligated to pay $15 per share to the bondholders.
D. If the share is purchased for $12, then the stockholders are obligated pay a dividend of $3 per share to the firm.
E. If the share is purchased for $10, then the stockholders are obligated to contribute $5 per share to the firm.
Answer: E
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Annie's Catering received $1200 cash from a customer for catering services to be provided next month. Given the choices below, determine the general journal entry that Annie's Catering will make to record the cash receipt. Assume the company's policy is to initially record prepaid and unearned items in balance sheet accounts.
A.
| Accounts Receivable | 1200? | |
| Catering Revenue | 1200? |
B.
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| Catering Revenue | 1200? |
C.
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D.
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| Catering Revenue | 1200? |
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| Accounts Receivable | 1200? |
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