Lexington Company Engaged in the Following Transactions During Year 1

question 11

Multiple Choice

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