The Following Items Are Taken from the Financial Statements of the Postal

question 10

Multiple Choice

The following items are taken from the financial statements of the Postal Service for the year ending December 31, 2018: $\begin{array}{lr}\text { Accounts payable } & 18,000 \\\text { Accounts receivable } & 11,000 \\\text { Accumulated depreciation - equipment } & 28,000 \\\text { Advertising expense } & 21,000 \\\text { Cash } & 15,000 \\\text { Common stock } & 42,000 \\\text { Dividends } & 14,000 \\\text { Depreciation expense } & 12,000 \\\text { Insurance expense } & 3,000 \\\text { Note payable, due 6/30/19 } & 70,000\\\text { Prepaid insurance (12-month policy) } & 6,000 \\\text { Rent expense } & 17,000 \\\text { Retained earnings (1/1/18) } & 60,000 \\\text { Salaries and wages expense } & 32,000 \\\text { Service revenue } & 133,000 \\\text { Supplies } & 4,000 \\\text { Supplies expense } & 6,000 \\\text { Equinment } & 210,000\end{array}$ What is the amount that would be reported for stockholders' equity at December 31, 2018?

• A) $158,000
• B) $144,000
• C) $130,000
• D) $102,000

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Definitions:

Journal Entry

A record in the books of accounts that notes the details of a financial transaction.

Semiannual Interest

Interest that is calculated and paid twice a year, often used in bond and loan agreements.

Redeem Bonds

This term refers to the act of paying off or buying back bonds issued by a company before their maturity date, often at a predetermined price.

Bond Purchase

The act of acquiring bonds, which are securities representing a loan made by an investor to a borrower, often for the purpose of investment and receiving interest income.