Question

In: Accounting

Lexington Company engaged in the following transactions during Year 1, its first year in operation:

Lexington Company engaged in the following transactions during Year 1, its first year in operation: (Assume all transactions are cash transactions)Acquired $6,000 cash from issuing common stock.Borrowed $4,400 from a bank.Earned $6,200 of revenues.Incurred $4,800 in expenses.Paid dividends of $800.
Lexington Company engaged in the following transactions during Year 2: (Assume all transactions are cash transactions)Acquired an additional $1,000 cash from the issue of common stock.Repaid $2,600 of its debt to the bank.Earned revenues, $9,000.Incurred expenses of $5,500.Paid dividends of $1,280.

25.1) What was the net cash flow from financing activities reported on Lexington's statement of cash flows for Year 2?

A)    $1,000 outflow.
   B)    $2,880 outflow.
   C)    $1,000 inflow.
   D)    $2,880 inflow.

25.2) What is the amount of total assets that will be reported on Lexington's balance sheet at the end of Year 1?

   A)    $12,000
   B)    $11,000
   C)    $1,600
   D)    $7,600

25.3) What was the amount of retained earnings that will be reported on Lexington's balance sheet at the end of Year 1?

   A)    $6,200
   B)    $1,400
   C)    $600
   D)    $5,400

25.4) What was the amount of liabilities on Lexington's balance sheet at the end of Year 2?

   A)    $480.
   B)    $1,800.
   C)    $1,000.
   D)    ($2,600).

Solutions

Expert Solution

25.1) Option B :- 2,880 outflow

Computation

Issue of shares (a) = 1,000

Repayment of bank debt (b) = (2,600)

Payment of dividend (c) = (1,280)

Net inflow/ (outflow) from financing activity (a+b+c) = (2,880)

*amount in () shown is negative amount

25.2) Option B :- 11,000

Cash Account
Particulars	Amount	Particulars	Amount
To Comman Stock	6,000	By Expense	4,800
To Bank debt	4,400	By dividend	800
To Revenue	6,200
		By balance	11,000

	16,600		16,600

*in the absense of other asset data cash balance will be the total asset

25.3) Option C :- 600

Opening Retained Earnings = 0

Add ; Net Income for the period (6,200-4,800) =1,400

Less: Dividend = 800

Closing rataind earnings (1,400-800) = 600

25.4) Option B :- 1,800

Opening out side liability (bank loan) = 4,400

Payment made during year 2 = 2,600

Closing balance (4,400-2,600) = 1,800

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

Packard Company engaged in the following transactions during Year 1, its first year of operations:

Packard Company engaged in the following transactions during Year 1, its first year of operations: (Assume all transactions are cash transactions.)1) Acquired $950 cash from the issue of common stock.2) Borrowed $420 from a bank.3) Earned $650 of revenues.4) Paid expenses of $250.5) Paid a $50 dividend.During Year 2, Packard engaged in the following transactions: (Assume all transactions are cash transactions.)1) Issued an additional $325 of common stock.2) Repaid $220 of its debt to the bank.3) Earned revenues of $750.4)...

Packard Company engaged in the following transactions during Year 1, its first year of operations. (Assume...

Packard Company engaged in the following transactions during Year 1, its first year of operations. (Assume all transactions are cash transactions.) 1) Acquired $1,100 cash from the issue of common stock. 2) Borrowed $570 from a bank. 3) Earned $750 of revenues cash. 4) Paid expenses of $280. 5) Paid a $80 dividend. During Year 2, Packard engaged in the following transactions. (Assume all transactions are cash transactions.) 1) Issued an additional $475 of common stock. 2) Repaid $325 of...

Packard Company engaged in the following transactions during Year 1, its first year of operations. (Assume...

Packard Company engaged in the following transactions during Year 1, its first year of operations. (Assume all transactions are cash transactions.) 1) Acquired $1,350 cash from the issue of common stock. 2) Borrowed $820 from a bank. 3) Earned $1,000 of revenues cash. 4) Paid expenses of $330. 5) Paid a $130 dividend. During Year 2, Packard engaged in the following transactions. (Assume all transactions are cash transactions.) 1) Issued an additional $725 of common stock. 2) Repaid $500 of...

The following transactions apply to Jova Company for Year 1, the first year of operation:

The following transactions apply to Jova Company for Year 1, the first year of operation: Issued $19,000 of common stock for cash. Recognized $219,000 of service revenue earned on account. Collected $171,900 from accounts receivable. Paid $134,000 cash for operating expenses. Adjusted the accounts to recognize uncollectible accounts expense. Jova uses the allowance method of accounting for uncollectible accounts and estimates that uncollectible accounts expense will be 1 percent of sales on account. The following transactions apply to Jova for...

The following transactions occurred at Pharaoh Inc. during its first year of operation: a. Issued 100,000...

The following transactions occurred at Pharaoh Inc. during its first year of operation: a. Issued 100,000 common shares at $5 each; 1,000,000 no par shares are authorized. b. Issued 10,000 common shares for a building and land. The building was appraised for $20,000, but the value of the land is undeterminable. The shares are selling for $10 on the open market. c. Purchased 1,000 of its own common shares on the open market for $16 per share. d. Declared a...

The following transactions apply to Jova Company for Year 1, the first year of operation: Issued...

The following transactions apply to Jova Company for Year 1, the first year of operation: Issued $16,000 of common stock for cash. Recognized $64,000 of service revenue earned on account. Collected $57,200 from accounts receivable. Paid operating expenses of $36,200. Adjusted accounts to recognize uncollectible accounts expense. Jova uses the allowance method of accounting for uncollectible accounts and estimates that uncollectible accounts expense will be 2 percent of sales on account. The following transactions apply to Jova for Year 2:...

The following transactions apply to Jova Company for Year 1, the first year of operation: Issued...

The following transactions apply to Jova Company for Year 1, the first year of operation: Issued $14,000 of common stock for cash. Recognized $214,000 of service revenue earned on account. Collected $166,400 from accounts receivable. Paid $129,000 cash for operating expenses. Adjusted the accounts to recognize uncollectible accounts expense. Jova uses the allowance method of accounting for uncollectible accounts and estimates that uncollectible accounts expense will be 2 percent of sales on account. The following transactions apply to Jova for...

The following transactions apply to Jova Company for Year 1, the first year of operation: Issued...

The following transactions apply to Jova Company for Year 1, the first year of operation: Issued $17,500 of common stock for cash. Recognized $62,500 of service revenue earned on account. Collected $56,000 from accounts receivable. Paid operating expenses of $36,800. Adjusted accounts to recognize uncollectible accounts expense. Jova uses the allowance method of accounting for uncollectible accounts and estimates that uncollectible accounts expense will be 2 percent of sales on account The following transactions apply to Jova for Year 2...

Sanchez Company engaged in the following transactions during Year 1: 1) Started the business by issuing...

Sanchez Company engaged in the following transactions during Year 1: 1) Started the business by issuing $13,700 of common stock for cash. 2) The company paid cash to purchase $8,200 of inventory. 3) The company sold inventory that cost $5,600 for $11,650 cash. 4) Operating expenses incurred and paid during the year, $5,100. Sanchez Company engaged in the following transactions during Year 2: 1) The company paid cash to purchase $12,000 of inventory. 2) The company sold inventory that cost...

Elaine Consulting incorporated on February 1, current year. The company engaged in the following transactions during...

Elaine Consulting incorporated on February 1, current year. The company engaged in the following transactions during its first month of operations. Feb. 1 Issued capital stock in exchange for $800,000 cash. Feb. 5 Borrowed $100,000 from the bank by issuing a note payable. Feb. 8 Purchased land, building, and office equipment for $750,000. The value of the land was $150,000, the value of the building was $540,000, and the value of the office equipment was $60,000. The company paid $200,000...

Subjects