X Company was created on September 1 and prepares monthly financial statements.

Question

X Company was created on September 1 and prepares monthly financial statements. During September, the company had the following transactions:

Received $85,000 from a group of investors and received a $98,000 loan from the bank.

Bought $8,195 of merchandise, $3,877 for cash and $4,318 on account.

Bought equipment costing $9,800, paying the manufacturer $5,300 in cash and promising to pay the remaining $4,500 next month.

Sold merchandise for $20,360, of which $15,848 was for cash and $4,512 was on account; cost of the merchandise was $10,180.

Paid $3,780 to suppliers for merchandise previously bought on account.

Collected $2,818 from customers on account.

Paid wages of $5,650.

Paid a total of $510 for rent and insurance in advance.

Recorded depreciation of $1,900.

Recorded a total of $111 for rent and insurance that had expired.

5. What were total equities on September 30?

6. What was Net Income in September?

Tries 0/3

Explanation / Answer

Solution.

5.Calculation of total equities on September 30.

6.Calculation of Net Income in September

Sales 20,360

Less : Cost of sales (10,180)

Gross Margin 10,180

Less : Paid wages (5,650)

Less : Rent and insurance (510)

Less : Depreciation (1,900)

Add : Expired insurance 111

Net Income 2,741

Particular Amount ($) Received from investor 85,000 Loan received 98,000 Sold Merchandise for cash 20,360 Collection from debtors 2,818 Expired insurance 111 Less : Bought merchandise in cash (3,887) Less : Bought merchandise on account 4,318 Less : Bought equipment in cash (5,300) Less : Paid wages (5,650) Less : Rent and Insurance (510) Less : Depreciation (1,900) Total Equities on september 30 180,954

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