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Q#1Fashion Company reported the following:Common stock, $3 par, 10,000 shares authorized, 5,000 shares issuedand outstandingWhat is the effect of a 10% stock dividend if the market price ofthe common stock is $30 per share when the dividend isdeclared?a. Retained earnings in the amount of $15,000 is transferred tothe contributed capital accounts.b. Cash decreases $30,000.c. Additional Paid-in Capital decreases $30,000.d. A stock dividend has no effect on any stockholders' equityaccounts.Q#2Below is information for Toronto Imports Corp. for 2015 and2016:Bonds payable, December 31, 2015 $500,000Bonds payable, December 31, 2016 800,000Loss on bond retirement--2016 15,000Interest expense on bonds--2016 45,000At the end of 2016, Toronto issued bonds at par value for $800,000cash. The proceeds from these bonds were used to retirethe $500,000 bond issue outstanding at the end of 2015 (beforetheir maturity date). All interest expense was paid in cashduring 2016.The following statements describe how Toronto reported the cashflow effects of the items described above on its 2016statement of cash flows. The indirect method is used to prepare theoperating activities section. Which of the following hasbeen reported incorrectly by Toronto?a. Payments of $560,000 were reported as a cash outflow in theinvesting activities section.b. Proceeds of $800,000 from the issuance of bonds were reported asa cash inflow in the financing activities section.c. The loss on bond retirement of $15,000 was added to net incomein the operating activities section.d. Interest expense of $45,000 was not reported separately becauseit is included in net income in the operating activitiessection.Q#3When using the indirect method, how is the decrease in accountspayable shown on the statement of cash flows?a. Financing activityb. Noncash investing and financing activityc. Investing activityd. Operating activityQ#4When using the indirect method, how is the issuance of stock toretire a long-term debt shown on a statement of cash flows?a. Investing activityb. Operating activityc. Noncash investing or financing activityd. Financing activityQ#5Which of the following operating activities results in a cashoutflow?a. Collecting accounts receivableb. Making cash salesc. Paying creditors for merchandised. Receiving deposits recorded as unearned revenue