Marquette Décor Is a Merchandiser That Operates a Small Retail

question 22

Multiple Choice

Marquette Décor is a merchandiser that operates a small retail store.Comparative balance sheets for the years ending December 31, 2018 and 2017 and its income statement for 2018 follow: $\begin{array}{lrr}&\text { December } 31\\\text { Assets }&2018&2017\\\hline \text { Cash } & \$ 35,400 & \$ 45,300 \\\text { Accounts receivable } & 11,400 & 14,500 \\\text { Merchandise inventories } & 36,500 & 34,100 \\\text { Equipment } & 90,000 & 66,000 \\\text { Accumulated depreciation } & \underline{(28,600) } & (31,400) \\\text { Total assets } & \$ 144,700 & \$ 128,500\\\\\text { Liabilities and Stockholders' Equity }\\\hline \text { Accounts payable } & \$ 14,300 & \$ 12,500 \\\text { Income taxes payable } & 4,500 & 8,800 \\\text { Long-term notes payable } & 16,500 & 23,000 \\\text { Common stock, } \$ 2 \text { par } & 88,200 & 65,300 \\\text { Retained earnings } & 21,200 & 18,900 \\ \text { Total liabilities and stockholders' equity } & \$ 144,700 & \$ 128,500 \\\\\text { Sales } & \$ 224,000 \\\text { Cost of goods sold } & 123,000 \\\text { Depreciation expense } & 14,000 \\\text { Other expenses } & 56,000 \\\text { Gain on sale of equipment } & 3,400 \\\text { Income taxes } & 16,000 \\\text { Net income } & \$ 18,400\end{array}$ During the year, equipment with an original cost of $17,000, and accumulated depreciation totaling $16,800 was sold for $3,600.Dividends were declared and paid during the year.How much cash was received from the issuance of stock during 2018?

• A)$88,200
• B)$22,900
• C)$11,450
• D)$25,200

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Definitions:

Hedger

An individual or entity that enters into contracts such as futures or options to offset the risk of price movements in the commodities or securities markets.

Prices Change

The fluctuation in the market price of goods, services, or securities over time due to various economic factors.

Put Option

A put option is a financial contract giving the holder the right, but not the obligation, to sell a specific amount of an asset at a predetermined price within a specific time frame.

Obligation

A duty or commitment to do something or to pay a debt, often legally binding.