Lexington Company Engaged in the Following Transactions During Year 1

question 153

Multiple Choice

Lexington Company engaged in the following transactions during Year 1, its first year in operation: (Assume all transactions are cash transactions.) Acquired $4,200 cash from issuing common stock.Borrowed $2,800 from a bank.Earned $3,700 of revenues.Incurred $2,520 in expenses.Paid dividends of $520.
Lexington Company engaged in the following transactions during Year 2: (Assume all transactions are cash transactions.)
Acquired an additional $1,100 cash from the issue of common stock.Repaid $1,720 of its debt to the bank.Earned revenues, $5,100.Incurred expenses of $2,990.Paid dividends of $1,360.
What was the amount of liabilities on Lexington's balance sheet at the end of Year 2?

• A)$1,100.
• B)($1,720).
• C)$840.
• D)$1,080.

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Definitions:

Closing Entries

Journal entries made at the end of an accounting period to transfer the balances of temporary accounts to permanent accounts.

Ledger Accounts

Individual records providing detailed information about all the transactions related to a specific account, kept in the ledger of a company.