Lexington Company Engaged in the Following Transactions During Year 1

question 32

Multiple Choice

Lexington Company engaged in the following transactions during Year 1, its first year of operations. (Assume all transactions are cash transactions.) Acquired $6,000 cash from issuing common stock.Borrowed $4,400 from a bank.Earned $6,200 of revenues.Incurred $4,800 in expenses.Paid dividends of $800.Lexington Company engaged in the following transactions during Year 2:Acquired an additional $1,000 cash from the issue of common stock.Repaid $2,600 of its debt to the bank.Earned revenues, $9,000.Incurred expenses of $5,500.Paid dividends of $1,280.The amount of retained earnings on Lexington's balance sheet at the end of Year 1 was:

• A) $6,200
• B) $5,400
• C) $1,400
• D) $600

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Definitions:

S And D Curves

Graphical representations of the supply and demand in a market, showing how quantity supplied and quantity demanded vary with price.

Total Amount

The entirety or sum total of units, numbers, or quantities considered or calculated.

Equilibrium Price

The price at which the quantity of a good or service demanded by consumers matches the quantity supplied by producers, resulting in market balance.

Producer Surplus

The difference between what producers are willing to accept for a good or service versus what they actually receive in the market.