An Electronics Store Sold a Home Theater System to an Employee

question 104

Multiple Choice

An electronics store sold a home theater system to an employee for $300,even though the retail price was $500.The gross profit percentage is 40%.Such discounts are available to all employees.How much income should be recognized by the employee from these transactions?

• A)$0
• B)$100
• C)$120
• D)$200

---

Definitions:

Common Stock

A type of equity security that represents ownership in a corporation, granting holders voting rights and dividends.

Par Value

The face value of a bond or the stock value stated in the corporate charter.

Convertible Preferred Stock

A type of preferred stock that gives holders the option to convert their shares into a specified number of common shares, usually after a predetermined date.

Common Stock

A type of equity security that represents ownership in a corporation, giving shareholders voting rights and a share in the company's profits through dividends.