Marco Nelson Opened a Frame Shop and Completed These Transactions

question 15

Multiple Choice

Marco Nelson opened a frame shop and completed these transactions: 1.Marco started the shop by investing $40,000 cash and equipment valued at $18,000 in exchange for common stock.
2.Purchased $70 of office supplies on credit.
3.Paid $1,200 cash for the receptionist's salary.
4.Sold a custom frame service and collected $1,500 cash on the sale.
5.Completed framing services and billed the client $200.
What was the balance of the cash account after these transactions were posted?

• A)$300.
• B)$41,500.
• C)$40,300.
• D)$38,500.
• E)$38,700.

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Definitions:

Pro Forma Financial Statements

Pro forma financial statements are financial reports that project the future financial performance of a company, often using assumptions or hypothetical scenarios.

Sales Forecast Assumption

The underlying conditions and criteria used to project future sales for a business.

Debt-Equity Ratio

A metric that highlights the use of equity versus debt in the strategic funding of company assets.

Dividend Payout Ratio

A financial ratio that measures the proportion of earnings a company pays out to its shareholders in the form of dividends.