Rawlings Corporation engaged in the following transactions during Year 1, its fi
ID: 2404233 • Letter: R
Question
Rawlings Corporation engaged in the following transactions during Year 1, its first year of operations. (Assume all transactions are cash transactions.)
1) Acquired $1,900 cash from the issue of common stock.
2) Borrowed $1,370 from a bank.
3) Earned $1,550 of revenues cash.
4) Paid expenses of $440.
5) Paid a $240 dividend.
During Year 2, Rawlings engaged in the following transactions. (Assume all transactions are cash transactions.)
1) Issued an additional $1,275 of common stock.
2) Repaid $885 of its debt to the bank.
3) Earned revenues of $1,700 cash.
4) Incurred expenses of $740.
5) Paid dividends of $290.
Total assets on Rawlings' balance sheet at the end of Year 2 will equal:
A. $5,490.
B. $1,060.
C. $960.
D. $5,200.
Explanation / Answer
Answer is D. $ 5200 Total cash balance at the end of Year-2 Year-1 Reciepts Issue f Common Stock 1900 Borrow form Bank 1370 Revenue received 1550 Payments: Expense paid 440 Dividend paid 240 Ending balance of cash a Year-1 4140 Add: Receipts Issue of stock 1275 Revenue received 1700 Subtotal 7115 Less: Expense Repayment of bank debt 885 Expense paid 740 Dividend paid 290 Cash balance at the end of Year-2 5,200 Note: Cash is the only assets in the busines
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