Nelson Company experienced the following transactions during Year 1, its first year in operation.Acquired $9,200 cash by issuing common stock.Provided $5,500 of services on account.Paid $2,400 cash for operating expenses.Collected $3,500 of cash from customers in partial settlement of its accounts receivable.Paid a $260 cash dividend to stockholders.What is the amount of total assets that will be reported on the balance sheet as of December 31, Year 1?
A)$10,040
B)$10,300
C)$12,300
D)$12,040

Question

Quizplus · Accepted Answer

The total assets of the company can be calculated using the basic accounting equation:
Total Assets = Total Liabilities + Stockholders' Equity

Transactions during Year 1:
- Acquired $9,200 cash by issuing common stock.
- Provided $5,500 of services on account.
- Paid $2,400 cash for operating expenses.
- Collected $3,500 of cash from customers in partial settlement of its accounts receivable.
- Paid a $260 cash dividend to stockholders.

Total Liabilities = $0 (no mention of any liabilities)
Stockholders' Equity = Common Stock ($9,200) + Retained Earnings (which can be calculated as follows):
Retained Earnings = Revenues ($5,500) - Expenses ($2,400) - Dividends ($260) = $2,840

Total Assets = Total Liabilities + Stockholders' Equity
Total Assets = $0 + ($9,200 + $2,840)
Total Assets = $12,040

Therefore, the amount of total assets that will be reported on the balance sheet as of December 31, Year 1 is $12,040. Option D is the correct answer.

Nelson Company Experienced the Following Transactions During Year 1, Its