Final Part II

Question 1

A company had a beginning balance in retained earnings of $43,800. It had net income of $6,800 and paid out cash dividends of $5,825 in the current period. The ending balance in retained earnings equals:
$56,425.
$5,825.
$44,775.
$42,825.
$12,625.

Beginning balance $ 43,800
Plus net income 6,800
Less dividends (5,825)

Ending balance $ 44,775

Answer 1

$44,775

Question 2

A corporation sold 13,500 shares of its $10 par value common stock at a cash price of $14 per share. The entry to record this transaction would include:
A credit to Paid-in Capital in Excess of Par Value, Common Stock for $189,000.
A credit to Common Stock for $189,000.
A credit to Common Stock for $135,000.
A debit to Paid-in Capital in Excess of Par Value, Common Stock for $54,000.
A debit to Cash for $135,000.

Answer 2

A credit to Common Stock for $135,000.