The Following Information Is Available for Brendon Company Before Closing

question 179

Multiple Choice

The following information is available for Brendon Company before closing the accounts. What will be the amount in the Income Summary account that should be closed to Brendon, Capital? $$\begin{array} { | l | r | } \hline \text { J. Brendon, Capital } & \$ 112,000 \\\hline \text { J. Brendon, Withdrawals } & 3 2 , 0 0 0 \\\hline \text { Fest earned } & 187,000 \\\hline \text { Depreciation Expense-Equipment } & 12,000 \\\hline \text { Wages expense } & 71,400 \\\hline \text { Interest expense } & 3 , 3 0 0 \\\hline \text { Insurance expense } & 11,700 \\\hline \text { Rent expense } & 24,200 \\\hline\end{array}$$

• A) $80,000.
• B) $32,400.
• C) $42,400.
• D) $43,000.
• E) $64,400.

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Definitions:

Firm Value

The total value of a company, measured by its market capitalization plus debts, minority interest, and preferred shares, minus total cash and cash equivalents.

Cost of Equity

The return a company theoretically pays to its equity investors to compensate them for the risk they undertake by investing in the stock.

WACC

Weighted Average Cost of Capital. It represents the average rate that a company is expected to pay to finance its assets, weighted according to the proportion of equity and debt in its capital structure.

Free Cash Flow

The amount of cash generated by a business that is available for distribution among all the securities holders of an organization, including dividends, share repurchases, and debt repayments.