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 $97,000 from a group of investors and received a $91,000 loan from the bank.

Bought $8,478 of merchandise, $3,784 for cash and $4,694 on account.

Bought equipment costing $9,900, paying the manufacturer $5,200 in cash and promising to pay the remaining $4,700 next month.

Sold merchandise for $21,230, of which $16,453 was for cash and $4,777 was on account; cost of the merchandise was $10,615.

Paid $3,919 to suppliers for merchandise previously bought on account.

Collected $2,981 from customers on account.

Paid wages of $5,190.

Paid a total of $532 for rent and insurance in advance.

Recorded depreciation of $1,600.

Recorded a total of $109 for rent and insurance that had expired.

5. What were total equities on September 30?

6. What was Net Income in September?

Explanation / Answer

X Company All Amounts in $ 6. Net Income for September Sales 21230 Cost of Sales 10615 Contribution Margin 10615 Less : Wages 5190 Less : Rent and Insurance 109 Less : Depreciation 1600 6899 Net Income 3716 5. Total Equities as on September 30 Share Capital 97000 Retained Earnings 3716 Total Equities 100716

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