X Company was formed on July 1, 2014, and had the following transactions during

Question

X Company was formed on July 1, 2014, and had the following transactions during the rest of 2014: received $8,970 in cash contributions from the owners purchased $8,558 worth of merchandise, all on account sold merchandise that cost $7,769 for $11,098, all on account paid $3,953 to suppliers for merchandise purchased on account received $3,020 from customers for merchandise sold on account paid $5,073 for land and equipment borrowed cash from the bank in the amount of $4,561 What were total assets on December 31, 2014 (ignore depreciation on the equipment and interest on the loan)?

Explanation / Answer

The following are the implications on Assets for the above transactions:

1) Cash (Assets) increased by $ 8,970

2) Inventory (Assets) increased by $ 8,558

3) Inventory (Assets) decreased by cost that is $ 7,769 and Debtors increased by $ 11,098

4) Cash (Assets) decreased by $ 3,953

5) Cash increased and debtors decreased by $ 3,020

6) Cash decreased and Land and Equipment increased by $ 5,073

7) Bank increased by $ 4,561

So, Total assets as on December 31, 2014

= $ 8,970+$ 8,558-$ 7,769+$ 11,098-$ 3,953+$ 3,020-$ 3,020-$ 5,073+$ 5,073+$ 4,561

= $ 21,465

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