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.

Answer 1

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