Question

Packard Company engaged in the following transactions during Year 1, its first year of operations: ( Assume all transactions are cash transactions.) 1) Acquired $1100 cash from the issue of common stock. 2) Borrowed $570 from a bank. 3) Earned $750 of revenues. 4) Paid expenses of $280. 5) Paid a $80 dividend. During Year 2, Packard engaged in the following transactions: ( Assume all transactions are cash transactions.) 1) Issued an additional $475 of common stock. 2) Repaid $325 of its debt to the bank. 3) Earned revenues of $900. 4) Incurred expenses of $420. 5) Paid dividends of $130. What is the amount of total stockholders' equity that will be reported on Packard's balance sheet at the end of Year 1?

A. $1570.
B. $1490.
C. $1020.
D. $390.

Answer 1

B. $1490.

Step-by-step explanation:

Accounting Equation Formula:

Assets = Liabilities + Stockholders' Equity

The Accounting Equation teaches us that Assets are increased by Debits and decreased by Credits, instead, Liabilities and Stockholders´ Equity decreased by Debits and increased by Credits. In the attached file, Debits and Credits are represented by positive and negative numbers according to if an increased or decreased must be done.

Please, see attached file