Reference no: EM132490624

The following information is provided for Bold Company for the year 2019:

Preferred stock, 9%, $50 par value, 1,400 shares issued and outstanding
Common stock, $100 par value, 2,400 shares issued and outstanding
Dividends in arrears for three prior years (2016­­-2018)
Total dividends declared and paid in 2019 were $54,000.

Question 1: How much of the 2019 dividend payment was paid to the preferred stockholders assuming the preferred stock is cumulative?

Multiple Choice

Option 1: $47,700.

Option 2: $28,800.

Option 3: $25,200.

Option 4: $6,300.

Question 2: Which of the following is correct?

Multiple Choice

Option 1: Deferred revenues will eventually become revenue earned.

Option 2: Working capital increases when a company pays the principal on a long-term note.

Option 3: Working capital is measured as current liabilities minus current assets.

Option 4: Deferred revenues are considered increases to stockholders' equity.

Question 3: Young Company is involved in a lawsuit. When would the lawsuit be recorded as a liability on the balance sheet?

Multiple Choice

Option 1: When the loss probability is reasonably possible and the amount can be reasonably estimated.

Option 2: When the loss is probable regardless of whether the loss can be reasonably estimated.

Option 3: When the loss is probable and the amount can be reasonably estimated.

Option 4: When the loss probability is remote and the amount can be reasonably estimated.