Question

Grant Company engaged in the following transactions during 2010, its first year in operations: (Assume all transactions are cash transactions)
1) Acquired $950 cash from the issue of common stock.
2) Borrowed $420 from a bank.
3) Earned $500 of revenues.
4) Paid expenses of $250.
5) Paid a $50 dividend.
During 2011, Grant engaged in the following transactions: (Assume all transactions are cash transactions)
1) Issued an additional $325 of common stock.
2) Repaid $220 of its debt to the bank.
3) Earned revenues of $750.
4) Incurred expenses of $360.
5) Paid dividends of $100.

69. Grant Company's net cash flow from operating activities for 2010 is
A. $620.
B. $670.
C. $250.
D. $200.

70. The total in Grant's retained earnings account BEFORE closing in 2010 is
A. $0.
B. $200.
C. $250.
D. none of the above

73. The amount of assets on Grant's 2011 balance sheet is
A. $1,915.
B. $490.
C. $1,965.
D. $395.

Answer 1

69. Grant Company's net cash flow from operating activities for 2010 is (c) $250.

Revenues $500- Expenses $250 = $250

70. The total in Grant's retained earnings account BEFORE closing in 2010 is (a) $0.

Before closing in 2010 means opening balance of 2010. Grant Company started it's operations in 2010. Thus, the opening balance of retained earnings will be $0 in 2010.

71. The amount of assets on Grant's 2011 balance sheet is (c) 1965.

Computation of Cash Balance at end of 2011
issue of common stock	$950
Borrowed from a bank.	$420
revenues in 2010	$500
expenses in 2010	-$250
Dividend in 2010	-$50
issue of additional common stock	$325
Repayment of debt	-$220
revenues in 2011	$750
expenses in 2011	-$360
Dividend in 2011	-$100
Cash Balance at end of 2011	$1,965

The company doesn't have any other asset than cash.

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