X Company is a merchandiser and prepares monthly financial statements. The follo
ID: 2598294 • 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 $45,000.
Borrowed $26,000 from a bank.
Bought merchandise from suppliers, paying $3,330 and promising to pay $5,301 next month.
Bought equipment from a manufacturer, paying $33,400 and promising to pay $5,000 in three months.
Paid $3,707 to merchandise suppliers that it had promised to pay.
Sold merchandise, receiving $17,197 cash and promises to pay of $4,353; the merchandise that was sold previously cost $10,775.
Paid a total of $530 for rent and insurance in advance.
Received $2,564 from customers who had promised to pay.
Paid $5,370 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?
Explanation / Answer
Question 4.
Hence the Cash balance at the end of January is $97288
Question 5
We can calculate equities in two ways
Directly from Equity share or taking balancing figure from the balance sheet
We choose second option for accurate that is Balancing figure from the balance sheet
Total Equity on January are Paid in Capital+Retained Earnings=204018+78592=282610
Question 6
Notes
Cash A/c Particulars Amount Particulars Amount To balance b/d 52864 By Purchases 3330 To Loan 26000 By Equipment 33400 To Sales 17197 By Accounts Payable 3707 To Accounts receivable 2564 By Rent and Insurance in advance 530 To Stock 45000 By Wages 5370 By balance c/d 97288 Total 143625 Total 143625Related Questions
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