The Following Information Is Available for the Travis Travel Agency

question 161

Multiple Choice

The following information is available for the Travis Travel Agency. After these closing entries what will be the balance in the Jay Travis, Capital account?

• A) $65,000.
• B) $80,000.
• C) $130,000.
• D) $145,000.
• E) $280,000.

---

Definitions:

Gain On Bargain Purchase

Occurs when a company acquires another company for a price less than the fair market value of its net assets, resulting in a gain on the acquisition balance sheet.

Income Tax Expense

The accounting expense associated with the income taxes a company is obligated to pay to governmental authorities based on its taxable income.

Tax Rate

A percentage at which an individual or corporation is taxed; the tax authority sets it, and it can vary based on income, property value, sales price, etc.

Business Combination

The coming together of separate entities or businesses into one reporting entity via a merger, acquisition, or consolidation.