Question

In: Accounting

1. beginning common stock balance is $40,000 retained earnings balance is $50,000, investments through stock issuances...

1. beginning common stock balance is $40,000 retained earnings balance is $50,000, investments through stock issuances are $20,000, net income is $30,000, and devidends are $10,000. What is total ending equaity?

2. What journal entry does a company normally make to record payment of cash for future insurance coverage?

a. Debits Cash and credits insurance expense.

b. debits insurance expense and credits cash.

c. debits insurance expense and credits prepaid insurance.

d. debits prepaid insurance and credits cash.

Solutions

Expert Solution

1. Ending retained earnings = Beginning retained earnings + Net income - Dividends = 50,000+30,000-10,000 = 70,000

Total ending equity= 40,000 + 20,000 + 70,000

= 130,000

2. The entry would be

Debit : prepaid insurance

Credit : Cash

Option D

ekkarill92 answered 1 year ago
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