Question

"Watt Company was established in January, Year 1. During Year 1 the company experienced the following events.

• Collected $6,000 cash from the issue of common stock.
• Borrowed $3,000 cash from the state bank.
• Earned $4,000 of cash revenue.
• Paid $2,000 cash expenses.

The company was liquidated at the end of Year 1. Based on this information"
A. the stockholders would receive $6,000.

B. the stockholders would receive $8,000.

C. the creditor (the bank) would receive $2.000

d. the creditor (the bank) would receive $6,000.

Answer 1

The stockholders would receive $6,000.

Step-by-step explanation:

The stockholders would receive $6,000.

The question provides information about the events that occurred during Year 1 for Watt Company. The company collected $6,000 cash from the issue of common stock and earned $4,000 of cash revenue. However, it also paid $2,000 cash expenses. Since the company was liquidated at the end of Year 1, the remaining cash would go to the stockholders, which is $6,000 ($6,000 collected from common stock - $2,000 expenses).