Reference no: EM132809223

Problem 1: In an effort to concentrate its resources in more profitable areas, Sheeran Corporation recently sold its family cookbook segment but retained its restaurant segment. The disposal constitutes ____________.

a) an extraordinary item

b) a discontinued operation, which should be disclosed net-of-tax effects

c) a discontinued operation, which should be treated as a prior period adjustment

d) a portion of income from continuing operations

e) an item which does not require disclosure

Problem 2: Marley Corporation has 25,000, 3%, $100 par preferred shares outstanding. The preferred stock was originally issued at 103. The current dividend has been fully paid. Total stockholders' stock equity is $8,000,000. The common stock equity is ___________.

a) $5,425,000

b) none of these

c) $4,850,000

d) $6,600,000

e) $5,000,000