Crusoe Waterworks Corporation provides plumbing services. Transactions of Crusoe

Question

Crusoe Waterworks Corporation provides plumbing services. Transactions of Crusoe Waterworks during the first year of operations are given below.

a)    Received $4,000 cash and issued common stock to Robinson.

b)    Paid $3,000 cash for equipment to be used for plumbing repairs.

c)     Borrowed $27,000 from a local bank and deposited the money in the checking account.

d)    Paid $900 rent for the year.

e)     Purchased $1,000 of office supplies on account.

f)     Completed a plumbing repair project for a local lawyer and received $3,200 cash.

Calculate the amount of total stockholders' equity after recording the transactions. Assume office supplies of $1,000 are left at the end of the year.

A) $6,300

B) $3,200

C) $4,000

D) $27,000

Explanation / Answer

Working In the books of Crusoe Waterworks Corporation Journal Entries Account Titles Debit Credit Income statement a Cash 4000 Plumbing Repair - revenue 3200 Common stock 4000 Ending Inventory-office supplies 1000 Less : Expenses b Equipment 3000 - Rent 900 Cash 3000 - Office supplies 1000 c Checking account 27000 Net Income 2300 Bank Loan 27000 Balance sheet d Rent 900 Assets Cash 900 Equipment 3000 Checking account 27000 e Office supplies 1000 Office supplies 1000 Expense payable 1000 Cash 3300 f Cash 3200 Total Assets 34300 Plumbing Repair- Revenue 3200 Equity & Liabilities Common stock 4000 Net Income 2300 Bank Loan 27000 Expense payable 1000 Total Equity & Liabilities 34300 Answer Amount of total shareholders equity after recording of transactions = Common stock + Net Income of the period Amount of total shareholders equity after recording of transactions = $4000 + $2300 = $6300 The answer is Option A

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