ABC Company Ended Year 1 with the Following Account Balances:Cash

question 35

Multiple Choice

ABC Company ended Year 1 with the following account balances:Cash $600, Common Stock $400, and Retained Earnings $200.The following transactions occurred during Year 2:Issued common stock for $19,000 cash.ABC borrowed an additional $11,000 from Chris Bank.ABC earned $9,000 of revenue on account.ABC incurred $4,000 of operating expenses on account.Cash collections of accounts receivables were $6,000.ABC provided additional services to customers for $1,000 cash.ABC purchased land for $14,000.ABC used $3,000 in cash to make a partial payment on its accounts payable.ABC declared and paid a $200 dividend to the stockholdersOn December 31 ABC had accrued salaries of $4,000.
-What is the amount of retained earnings that will be shown on the balance sheet prepared at the end of Year 2?

• A) $2,000
• B) $5,800
• C) $6,000
• D) $6,200

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Definitions:

Meals

The food that is prepared and served, typically at regular occasions or times during the day, such as breakfast, lunch, or dinner.

Budgets

Detailed plans that outline expected income and expenditures over a specific period, often used by individuals, organizations, or governments to manage finances.

Marginal Rate

The rate at which one quantity changes relative to a change in another quantity.

Substitution

The economic principle where consumers replace pricier items with less expensive alternatives when prices rise or their purchasing power decreases.