126.Indicate whether each of the following statements about equity is true or false._______ a) Operating expenses reported on the income statement increase retained earnings._______ b) Common Stock is...

126.Indicate whether each of the following statements about equity is true or false.


_______ a) Operating expenses reported on the income statement increase retained earnings.
_______ b) Common Stock is a part of contributed or paid-in capital for a corporation.
_______ c) Retained earnings is increased by loans received from a bank.
_______ d) Dividends paid to stockholders decrease retained earnings.
_______ e) Owners' equity is the residual interest in the company resulting from the difference between assets and liabilities.

127.Stinespring Company was founded in 2012. It acquired $35,000 cash by issuing stock to investors and an additional $20,000 cash by borrowing from creditors. During 2012 it received $15,000 cash revenues and paid $22,000 in cash expenses. The company then went out of business.


Required:


a) Explain the term, "business liquidation."
b) What amount of cash should Stinespring Company have had on hand immediately before going out of business?
c) What amount of cash will Stinespring's creditors receive?
d) What amount of cash will Stinespring's stockholders receive?