The Sweet Smell of Success Fragrance Company Borrowed $60,000 from the Bank

question 60

Multiple Choice

The Sweet Smell of Success Fragrance Company borrowed $60,000 from the bank to be paid back in five years and used all of the money to purchase land for a new store.Sweet Smell's balance sheet would show this as:

• A)$60,000 under Land and $60,000 under Notes Payable (long-term).
• B)$60,000 under Depreciation Expense and $60,000 under Notes Payable (long-term).
• C)$60,000 under Land and $60,000 under Notes Receivable (long-term).
• D)$60,000 under Other Assets and $60,000 under Other Liabilities.

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Definitions:

Oversubscription Privilege

Allows shareholders to purchase unsubscribed shares in a rights offering at the subscription price.

Rights Offering

An opportunity for existing shareholders to purchase additional shares of a company at a predetermined price before the company offers them to the general public.

Underwriting Provision

A term in an agreement that outlines the responsibilities and risks taken by an underwriter in facilitating a public offering of securities.

Private Placements

A method of raising capital through the sale of securities to a small number of selected investors rather than through a public offering.