X Company is a merchandiser and prepares monthly financial statements. The follo
ID: 2598007 • Letter: X
Question
X Company is a merchandiser and prepares monthly financial statements. The following is its balance sheet at the beginning of January:
The following summary transactions occurred during January:
Sold stock to investors for $40,000.
Borrowed $22,000 from a bank.
Bought merchandise from suppliers, paying $3,520 and promising to pay $4,530 next month.
Bought equipment from a manufacturer, paying $39,200 and promising to pay $4,700 in three months.
Paid $3,326 to merchandise suppliers that it had promised to pay.
Sold merchandise, receiving $16,327 cash and promises to pay of $4,503; the merchandise that was sold previously cost $10,415.
Paid a total of $518 for rent and insurance in advance.
Received $2,901 from customers who had promised to pay.
Paid $5,330 for wages, utilties, and other miscellaneous expenses.
Note: Ignore adjusting entries.
4. What was the cash balance on January 31?
5. What were total equities on January 31?
6. What was net income in January?
Balance Sheet January 1Explanation / Answer
Cash Balance on January 31 Cash Balance on 1st January $50,201 Add: Sold of stock to investors $40,000 Borrowed From Bank $22,000 Sold of mechandise $16,327 Received from customers $2,901 Total $131,429 Less: Bought Merchandise from suppliers $3,520 Bought Equipment $39,200 Paid Merchandise Suppliers $3,326 Paid rent & Insurance in advance $518 Paid wages utilties & other Misc Exp $5,330 Total $51,894 Cash Balance on January 31 ( 131429-62309) $79,535 Total Equities on January 31 Equites on January 1st $378,966 Add Sold Stoct to Investors $40,000 Borrowed From Bank $22,000 Net income in January $5,085 Accounts Payable Bought Merchandies & Promise to Pay(4530-3326) $1,204 Bought Equipment & Promise to pay $4,700 Total Equites on January 31st $451,955 Net Income in January Sale of Merchandies ( $16327+$4503) $20,830 Less : Cost of sold of merchandies $10,415 Paid for wages & Utilities & Misc Exp $5,330 Net Income in January $5,085
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