Multiple choice

1. Birch issued 200 shares of $12 par common stock in exchange for a piece of equipment with a current market value of $3,000. Which of the following is not part of the journal entry for this transaction?

A. Crediting paid-in capital in excess of par common for $600

B. Crediting common stock for $3,000

C. Crediting common stock for $2,400

D. Debiting equipment for $3,000

2. A company has $56,000 in cash; $12,000 in accounts receivable; $25,000 in short-term investments; and $100,000 in merchandise inventory. The company also has $60,000 in current liabilities. The company's quick ratio is

A. 0.933.

B. 1.550.

C. 3.217.

D. 1.133.

3. What is the rate of return on common stockholders' equity if sales are $100,000, net income is $22,700,and average common stockholders' equity is $86,000?

A. 86.0%

B. The rate of return can't be determined from the information given.

C. 22.7%

D. 26.4%

4. Cost of goods sold for the year was $850,000. Inventory was $60,000 at the beginning of the year and $90,000 at the end of the year. There were no changes in the amount in accounts payable for the year. Cash payment for merchandise to be reported under the direct method is

A. $910,000.

B. $850,000.

C. $940,000.

D. $880,000.