Packard Company Engaged in the Following Transactions During Year 1

question 97

Multiple Choice

Packard Company engaged in the following transactions during Year 1, its first year of operations. (Assume all transactions are cash transactions.) 1) Acquired $1,700 cash from the issue of common stock.2) Borrowed $1,170 from a bank.3) Earned $1,350 of revenues cash.4) Paid expenses of $400.5) Paid a $200 dividend.During Year 2, Packard engaged in the following transactions. (Assume all transactions are cash transactions.) 1) Issued an additional $1,075 of common stock.2) Repaid $745 of its debt to the bank.3) Earned revenues of $1,500 cash.4) Incurred expenses of $660.5) Paid dividends of $250.What is the amount of retained earnings that will be reported on Packard's Year 2 balance sheet?

• A) $985
• B) $1,590
• C) $1,340
• D) $1,700

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Definitions:

Psychic Energy

In psychoanalytic theory, a concept denoting the force or process underlying mental activity and productivity, originally described by Freud.

Aggressive Drive

An innate or developed compulsion that pushes individuals toward hostile or assertive actions to achieve their goals.

Human Nature

The inherent characteristics, feelings, and behavioral traits shared by all humans.

Libido

A term used in psychoanalytic theory to denote the energy of the sexual drive.