Reference no: EM133013952

Questions -

Q1- The beginning-of-the-year total owner's equity for a firm was $40,000. During the year, the firm issued common stock for a total proceeds of $20,000, earned $10,000 net income, and paid $5,000 in cash dividends. If ending total liabilities are $100,000, what is ending total assets?

A. $165,000

B. $75,000

C. $35,000

D. $100,000

Q2- A corporation was organized on January 1. At that time, 10,000 shares of common were sold and issued at $10.00 per share cash. $20,000 of the proceeds was used to purchase equipment. The corporation had promised to pay $2.00 per share in dividends during the year if income exceeded $40,000. As it turned out, income was $60,000 however, due to a severe cash shortage the corporation declared a scrip dividend (resulting in a current liability) rather than an immediate cash dividend.

If no other transaction occurred which would affect retained earnings, the corporation should report on December 31, retained earnings of:

A. $160,000

B. $40,000

C. $60,000

D. $20,000