ABC Inc. was incorporated two years ago by issuing 5,000 shares of common stock at \$400 each and borrowing \$240,000 from a bank on a long-term note.
Question

# ABC Inc. was incorporated two years ago by issuing 5,000 shares of

common stock at \$400 each and borrowing \$240,000 from a bank on a long-term note. Last year, ABC reported net income of \$40,000 and paid a cash dividend of \$1,800. Last year the company also borrowed an additional \$320,000 from the bank. What was total assets on ABC's balance sheet at the end of the year last year?
Select one:
a. None of these
b. \$2,600,000
c. \$2,558,200
d. \$2,598,200

On December 31, 2017, Johnson Inc. has total liabilities of \$520,000 and total equity of \$446,000. The company needs to raise additional funds through debt and equity. The company will issue 1,000 shares of common stock at \$9 per share and in addition it intends to borrow as much as it can from Bank of Morganville. Bank of Morganville requires a maximum debt-to-asset ratio of 0.8.
What is the maximum additional amount that Johnson Inc. can borrow after the additional stock is issued?
Select one:
a. \$1,264,000
b. \$1,300,000
c. \$260,000
d. \$0 (the company already exceeds the 0.8 debt-to-asset ratio)

Paper Inc. sells markers. During January 2018, its inventory records for one brand of its markers were as follows:

Quantity Price per market Total
Beginning Inventory  16 \$1.21 = \$19.36
January 6 Purchase  6  \$0.88 =\$5.28
January 10 Sale  9 N/A
January 15 Purchase  8  \$0.91 =\$7.28
January 20 Sale  3 N/A
January 25 Purchase      9 \$0.85 =\$7.65

Determine the cost of goods sold using the perpetual weighted average cost method.
Select one:
a. \$12.96
b. \$13.20
c. \$13.58
d. \$12.18

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