Ask Question
7 April, 11:27

Packard Company engaged in the following transactions during Year 1, its first year of operations. (Assume all transactions are cash transactions.) 1) Acquired $1,300 cash from the issue of common stock. 2) Borrowed $770 from a bank. 3) Earned $950 of revenues cash. 4) Paid expenses of $320. 5) Paid a $120 dividend. During Year 2, Packard engaged in the following transactions. (Assume all transactions are cash transactions.) 1) Issued an additional $675 of common stock. 2) Repaid $465 of its debt to the bank. 3) Earned revenues of $1,100 cash. 4) Incurred expenses of $500. 5) Paid dividends of $170. What is Packard's retained earnings account balance at the end of Year 1 before the process of closing the accounts has been undertaken?

+2
Answers (1)
  1. 7 April, 14:05
    0
    Packard's retained earnings account balance at the end of Year 1 = $ (1,300 + $ 770 + $ 950) - $ 320 - $ 120

    = $ 3020 - ($ 320 + $ 120)

    = $ 2580

    Explanation:

    All the inflow items are below -

    (1) Acquired $1,300 cash from the issue of common stock.

    (2) Borrowed $770 from a bank.

    (3) Earned $950 of revenues cash.

    All the outflow items are below -

    (1) Paid expenses of $320.

    (2) Paid a $120 dividend.

    Hence, Packard's retained earnings account balance at the end of Year 1 is the sum of all the inflow items minus the sum of all the outflow items as shown in the answer.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Packard Company engaged in the following transactions during Year 1, its first year of operations. (Assume all transactions are cash ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers