Table 1-3 Ace Builders Had the Following Transactions in June: Earned $4,000

question 16

Multiple Choice

Table 1-3
Ace Builders had the following transactions in June: earned $4,000 "on account" that will be collected in cash next month; collected $3,000 from a customer that was owed from a previous month; incurred $500 of repair expense and paid cash to the repairman; paid $1,200 cash to a supplier that it owed from the previous month; paid out $800 in cash withdrawals to the owner.
-For Ace Builders, what is the combined effect on owner's capital from the June transactions?

• A)Up $2,700
• B)Up $3,500
• C)Up $4,500
• D)Down $800

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Definitions:

Premium Amortization

The gradual expense or reduction of the premium paid above the par value of a debt security over its remaining term.

Interest Expense

The charge an entity bears for the funds it has borrowed over a set period.

Market Rate

The current price at which an asset or service can be bought or sold in a particular market.

Coupon Rate

The interest rate stated on a bond or other fixed-income security, expressed as a percentage of its face value.