Purdue MGMT 200 Final Exam Review || RATED 100%
CORRECT ANSWERS.
A company's capital structure refers to: correct answers Its mixture of liabilities and
stockholders' equity.
Airline Accessories obtains a $100,000, three-year loan, at 6% interest, with monthly
payments of $3,042. What amount would be recorded as the reduction in principal for the
first full month? correct answers $500
Which of the following usually represents an advantage of leasing over purchasing an asset
with an installment note? correct answers Leasing payments are often lower than installment
payments
Leasing generally requites less cash upfront
Leasing typically offers greater flexibility and lower costs in disposing of an asset
The Surf's Up issues 1,000 shares of 6%, $100 par value preferred stock at the beginning of
2020. All remaining shares are common stock. The company was not able to pay dividends in
2020, but plans to pay dividends of $18,000 in 2021.
Assuming the preferred stock is cumulative, how much of the $18,000 dividend will be paid
to preferred stock holders and how much will be paid to common stockholders in 2021.
correct answers $12,000 to preferred stockholders and $6,000 to common stockholders in
2021
The board of directors of Capstone Inc. declared a $0.60 per share cash dividend on its $1 par
common stock. On the date of declaration, there were 50,000 shares authorized, 20,000 of
those shares issued and 5,000 shares held as treasury stock. What is the entry when the
dividends are declared? correct answers Dividends 9000
Dividends Payable 9000
Authorized common stock refers to the total number of shares? correct answers that can be
issued
Camp Elim obtained a $125,000, 6%, 5 year loan for a new camp bus on January 1, 2021.
What amount will be recorded for interest expense for the first months payment on January
31, 2021? correct answers $625
Matt is trying to decide how much an investment of $10,000 will grow to be in the future.
Which of the following will he NOT need to calculate that amount? correct answers Present
Value Table
On April 1, 2021 a company signs a 20 month lease for equipment. Monthly payments of
$554.15 begin on May 1, 2021. The company's normal borrowing rate is 12%. For what
amount would the company record the lease on April 1, 2021? correct answers $10,000
A home loan with fixed monthly payment and the house as collateral most closely represents
which of the following bond characteristics? correct answers Secured and Serial
, convertible bonds correct answers Provide potential benefits to both the issuer and the
investor.
If a company issues 1,000 shares of $1 par value common
stock for $20 per share, what would be the effect on the
accounting equation? correct answers Increase assets and increase stockholders' equity
a company currently has 200,000 shares issued and 190,000 shares outstanding. If the
company purchases 20,000 of treasury stock, what amount of the shares will be outstanding?
correct answers 170,000
Crossroads Mall had 100,000 outstanding shares of common stock. On June 16, 2021,
Crossroads repurchased 20,000 shares of its own stock at $30 per share. On July 23, 2021,
Crossroads resold 10,000 shares at $28 per share. What net effect did the repurchase and the
resell of common stock have on the accounting equation? correct answers decrease in assets
and decrease in stockholders' equity
both cash dividends and stock dividends correct answers reduce Retained Earnings
Preferred stock is called preferred stock because its usually has two preferences over
common stock. Those two preferences are? correct answers Distribution of assets if the
corporation dissolved
Payment of Dividends
What is not an advantage of debt financing? correct answers Debt financing often has no
maturity date.
Which of the following is not a primary source of long-term debt financing? correct answers
Accounts Payable
In each succeeding payment on an installment note: correct answers The amount that goes to
interest expense decreases.
Airline Accessories obtains a $100,000, three year loan, at 6% interest, with monthly
payments of $3,042. What amount would be recorded for interest expense for the first full
month? correct answers $500
Airline Accessories obtains a $100,000, three-year loan, at 6% interest, with monthly
payments of $3,042. What amount would be recorded as the reduction in principal for the
first full month? correct answers $2,542
Airline Accessories obtains a $100,000, three-year loan, at 6% interest, with monthly
payments of $3,042. What amount would be recorded as interest expense in the second
month? correct answers $487
Airline Accessories obtains a $100,000, three-year loan, at 6% interest, with monthly
payments of $3,042. What amount would be recorded as the reduction in principal for the
second month? correct answers $2,555
