Questions 4, 5, and 6 refer to the following information X Company is a merchand

Question

Questions 4, 5, and 6 refer to the following information

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 $45,000.

Borrowed $21,000 from a bank.

Bought merchandise from suppliers, paying $3,062 and promising to pay $5,475 next month.

Bought equipment from a manufacturer, paying $31,700 and promising to pay $4,700 in three months.

Paid $3,860 to merchandise suppliers that it had promised to pay.

Sold merchandise, receiving $15,346 cash and promises to pay of $4,714; the merchandise that was sold previously cost $10,030.

Paid a total of $575 for rent and insurance in advance.

Received $3,379 from customers who had promised to pay.

Paid $5,680 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 1

Explanation / Answer

4. $93,456

5. $344,874

6. $4,350

Working:

X Company Trial Balance as at January 31 Opening Transactions Adjusted Income statement Balance sheet Account Debit Credit Debit Credit Debit Credit Debit Credit Debit Credit Cash 53608 84725 44877 93456 93456 Accounts Receivable 33013 4714 3379 34348 34348 Inventory 84951 8537 10030 83458 83458 Prepaid rent 5346 575 5921 5921 Equipment 205801 36400 242201 242201 Accounts payable 51480 3860 10175 57795 57795 Wages payable 1485 1485 1485 Notes payable 34230 21000 55230 55230 Paid in capital 232461 45000 277461 277461 Retained earnings 63063 63063 67413 Sales revenue 20060 20060 20060 Cost of goods sold 10030 10030 10030 Wages expense 5680 5680 5680 382719 382719 154521 154521 475094 475094 15710 20060 459384 459384 Net Income 4350 T o t a l 382719 382719 154521 154521 475094 475094 20060 20060 459384 459384 0 Equity = Paid in capital + retained earnings               =277,461 + 67,413 = 344,874

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