Warren Enterprises Began Operations During Year 1

question 57

Multiple Choice

Warren Enterprises began operations during Year 1.The company had the following events during Year 1:
The business issued $40,000 of common stock to its stockholders.
The business purchased land for $24,000 cash.
Services were provided to customers for $32,000 cash.
Services were provided to customers for $10,000 on account.
The company borrowed $32,000 from the bank.
Operating expenses of $24,000 were incurred and paid in cash.
Salary expense of $1,600 was accrued.
A dividend of $8,000 was paid to the stockholders of Warren Enterprises.
After closing,what is the balance of the Retained Earnings account as of December 31,Year 1?

• A)$10,000
• B)$8,400
• C)$16,400
• D)$42,000

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Definitions:

Bargain Purchase Option

A provision in a lease agreement that allows the lessee to purchase the leased asset at the end of the lease term for a price significantly lower than the expected fair market value.

CRA

Canadian Revenue Agency, an agency that administers tax laws for the Canadian government and for most provinces and territories, or Community Reinvestment Act, a U.S. federal law designed to encourage commercial banks and savings associations to help meet the needs of borrowers in all segments of their communities.