Question

1. XYZ Company's balance sheet reported assets of $80,000, liabilities of $22,000 and common stock of $35,000 as of December 31, 2018. There was no preferred stock.  If net income during 2019 was $31,000 and XYZ declared a $17,000 dividend during 2019, payable in 2020, then the balance in retained earnings at December 31, 2019 is

a. $  14,000
b. $  37,000
c. $  44,000
d. $  54,000

2.  The collection of cash in the current period for consulting services that had been performed and properly accounted for in a prior period is an example of which type of transaction in the current period?

a. Asset source
b. Claims exchange
c. Asset use
d. Asset exchange

3. BB Company received $32,000 cash from the issue of common stock on January 1, 2019, its first date of operations. During 2019, BB earned $14,500 of revenue on account. The company also collected $4,500 cash from accounts receivable and paid $2,000 cash for rent expense during 2019.  The company also paid $5,000 for salaries expense during 2019.  Based on this information alone, the cash balance at December 31, 2019 was

a. $ 29,500.
b. $ 34,500.
c. $ 40,000.
d. $ 49,000.

4. Roscoe Enterprises had the following events during 2019, its second year of operations:

• Services were provided to customers for $55,000 cash during 2019.
• Customers paid $10,000 of cash to Roscoe in December 2019 for additional services to be provided in 2020.
• Operating expenses of $28,000 were incurred and paid in cash throughout 2019.
• Salary expense of $6,000 was incurred and accrued in 2019, but not paid until 2020.
• A dividend of $8,000 was declared and paid to the stockholders of Roscoe Enterprises in February 2019.

Assuming the company’s beginning retained earnings balance was $31,400 at January 1, 2019.  The balance in the retained earnings account as of December 31, 2019 would be:

a. $36,400
b. $44,400
c. $46,400
d. $54,400

5. Michaels Corporation provided consulting services of $2,500 in the current period to a customer who paid $1,600 immediately and promised to pay the remainder in the next period.  Which of the following is true?

a.  Revenue equals the amount recorded as an increase to cash during the current
     period.
b.  As a result of this transaction, the increase to retained earnings equals the
     increase in cash in the current period.
c.  Liabilities are unaffected.
d.  All of the above are true.

Answer 1

Question 1

,Correct answer-------------(b) $37,000

Working

As per accounting equation

Assets = Liabilities + Equity

And Equity = Common stock + Retained earnings

So

Assets	$    80,000.00
Less: Liabilities	$ (22,000.00)
Less: Common stock	$ (35,000.00)
Retained earnings	$    23,000.00

.The retained earnings on dec 31 2019 is calculated below

Statement of Retained earnings
Retained Earnings January 1, 2019	$        23,000.00
Add: Profit Earned during the year	$        31,000.00
Less: Dividend Declared during the year	$      (17,000.00)
Retained Earnings December 31, 2019	$        37,000.00