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 $8,130 in cash contributions from the owners purchased $8,924 worth of merchandise, all on account sold merchandise that cost $6,730 for $11,216, all on account paid $3,964 to suppliers for merchandise purchased on account received $3,679 from customers for merchandise sold on account paid $5,825 for land and equipment borrowed cash from the bank in the amount of $4,340 What were total assets on December 31, 2014 (ignore depreciation on the equipment and interest on the loan)?

Explanation / Answer

Income Statement DR CR Particulars Amount ($) Particulars Amount ($) Purchases 8,924 Sales 11,216 Closing Stock (8,924-6,730) 2,194 Net Profit 4,486            13,410            13,410 Balance Sheet Liabilities & Capital Amount ($) Assets Amount ($) Owners Contribution 8,130 Inventory 2,194 Profit for the period 4,486 Sundry debtors 7,537 Land & equipment 5,825 Sundry Creditors (8,924-3,964) 4,960 Cash balance 6,360 Bank borrowing 4,340 Total            21,916            21,916

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