Use the Following Information to Answer Questions

question 89

Multiple Choice

Use the following information to answer questions
Packard Company engaged in the following transactions during 2015,its first year in operations: (Assume all transactions are cash transactions. )
1) Acquired $950 cash from the issue of common stock.
2) Borrowed $420 from a bank.
3) Earned $650 of revenues.
4) Paid expenses of $250.
5) Paid a $50 dividend.
During 2016,Packard engaged in the following transactions: (Assume all transactions are cash transactions. )
1) Issued an additional $325 of common stock.
2) Repaid $220 of its debt to the bank.
3) Earned revenues of $750.
4) Incurred expenses of $360.
5) Paid dividends of $100.
-The total in Packard's retained earnings account before closing in 2015 is

• A)$400.
• B)$0.
• C)$350.
• D)$450.

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Definitions:

Cartels

Coalitions of independent businesses formed to regulate production, pricing, and marketing of goods to maximize collective profits.

Price Leadership

A market situation where one or more dominant firms set the price of goods or services, and other firms in the industry follow suit.

Kinked-Demand Curve Model

An economic theory suggesting that prices become rigid or sticky due to competing firms' responses to price changes.

Collusion

A secret agreement between firms in a market to fix prices, limit production, or divide markets, in order to reduce competition and increase profits.