Question

Nelson Company experienced the following transactions during Year 1, its first year in operation. Acquired $6,200 cash by issuing common stock. Provided $2,500 of services on account. Paid $1,650 cash for operating expenses. Collected $2,000 of cash from customers in partial settlement of its accounts receivable. Paid a $110 cash dividend to stockholders. What is the balance of the retained earnings that will be reported on the balance sheet as of December 31, Year 1

Answer 1

Answer:

$740

Explanation:

The balance of retained earnings that would be reported on the balance sheet as of December 31 year 1 is computed as;

= Services provided on account - cash paid for operating expenses - cash dividend paid to stockholders

= $2,500 - $1,650 - $110

= $740