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

ID: 2484640 • Letter: X

Question

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

1. Received $84,000 from a group of investors and received a $90,000 loan from the bank.

2. Bought $8,234 of merchandise, $3,683 for cash and $4,551 on account.

3. Bought equipment costing $10,200, paying the manufacturer $5,800 in cash and promising to pay the remaining $4,400 next month.

4. Sold merchandise for $21,800, of which $17,227 was for cash and $4,573 was on account; cost of the merchandise was $10,900.

5. Paid $3,233 to suppliers for merchandise previously bought on account.

6. Collected $2,699 from customers on account.

7. Paid wages of $5,130.

8. Paid a total of $564 for rent and insurance in advance.

9. Recorded depreciation of $1,600.

10. Recorded a total of $117 for rent and insurance that had expired.

Question: What were total equities on September 30?

Initial Equity investment by investors = 84000

Total Equity at end will constitute of amount invested by investors + profits earned during the period

Profits earned during september will be calculated as

Merchandise sold = 21800

Cost of merchandise sold = 10900

Gross profit = 21800-10900, = 10900

Now we are given Opearting expenses as

Wages = 5130

depreciation = 1600

rent and insurance expired during month = 117

Total operating expenses = 6847

Net income = Gross profit - opearting expenses

= 10900 - 6847 , = 4053

Equity at september 30 = 84000 + 4053 ,

= 88053

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.