Nelson Company Had Equity Accounts in 2008 as Follows Projected Income Is $150,000 and 40% of This Amount Will

question 10

Multiple Choice

Nelson Company had equity accounts in 2008 as follows: $\begin{array}{llcc} \text {Common Stock (\$1 Par Value) } &\$120,000 \\ \text {Retained Earnings } &\underline{32,000}\\ \text {Total Shareholder's Equity } &\$152,000\\\end{array}$
Projected income is $150,000 and 40% of this amount will be paid out immediately as dividends.What will the ending retained earnings account be?

• A)$90,000
• B)$92,000
• C)$122,000
• D)$210,000
• E)$242,000

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Definitions:

Balance Sheet

An accounting document showing the worth of a company's assets, debts, and owner's equity on a particular date.

Asset

Resources owned by a business that have economic value and can provide future benefits.

Liability

Financial obligations or debts that a company owes to others, recorded on the balance sheet.

Prepaid Rent

An expense that has been paid in advance, recorded as an asset on the balance sheet, and allocated over the period the payment covers.