Question

Below are the 2014 and 2015 year-end balance sheets for Tran Enterprises:

Answer 1

Answer:

The correct option is (c)

Explanation:

From the year end balance sheet for 2014 and 2015 it can be seen that common stock balance as on 2014 was 2,000,000 and as on 2015, it increased to 3,000,000.

An increase in common stock implies that the company issued new 1,000,000 common stock in 2015.

Option (a) cannot be determined as no income statement item is given.

Option (b) is incorrect as the company reduced its short term bank debt in 2015.

Option (d) is incorrect as long term debt was issued in 2014 and not in 2015.

Option (e) is incorrect as company had issued and not repurchased common stock.