Raul was a fitness fanatic. If he wasn't out for a run or a bike ride, he was at the gym lifting weights and building muscle. He decided to open a fitness studio, thinking he would be a natural at running such a business
But Raul hadn't counted on the responsibility of keeping records, meeting IRS deadlines, withholding taxes from employees' paychecks, and so on. The business didn't generate enough revenue for Raul to afford to hire someone to take care of these issues for him. Raul had to close the business. Which of the drawbacks of being a sole proprietorship did Raul experience?
A) having unlimited financial liability
B) having limited financial resources and few fringe benefits
C) having management problems
D) being unable to franchise
E) not being able to sell or pass along the business
Answer: C
Explanation: C) Raul did not have the management skills or the managerial discipline to do the necessary paperwork to keep his business alive.
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Watson Company has 5,000 shares of $5 par, 3% preferred stock outstanding, and 25,000 shares of $2 par common stock outstanding. The preferred stock is cumulative and no dividends have been paid for the past two years. If the company wishes to distribute $2 per share to the common stockholders, what is the total amount of dividends that must be paid in the current year?
a. $2,250 b. $50,000 c. $50,750 d. $52,250
Exhibit 14-11 Omega, Inc issued $100,000 of its 7% five-year bonds on January 1, 2014, at 98. Interest is paid on January 1 and July 1. The bonds are callable at 104 and straight-line amortization is used. The bonds are recalled on April 1, 2016. ? Refer to Exhibit 14-11. The journal entry to record the reacquisition of the bonds will include a
A) debit to Loss on Bond Redemption for $5,100. B) credit to Gain on Bond Redemption for $5,000. C) debit to Discount on Bonds Payable for $1,100. D) debit to Loss on Bond Redemption for $5,200.
On January 16, Half Circle Company sold $5,000 of merchandise to Arnold, on account. Half Circle could not collect cash from Arnold and wrote off the account. Prepare a journal entry to record the write-off, assuming Half Circle uses the allowance method. Omit explanation.
What will be an ideal response?
An adjusting entry made to record salaries earned but not yet paid or recorded is made with which of the following entries?
A) Salaries Expense - Debit; Cash - Credit B) Salaries Payable - Debit; Salaries Expense - Credit C) Salaries Expense - Debit; Salaries Payable - Credit D) Cash - Debit; Salaries Expense - Credit