X Company is a merchandiser and prepares monthly financial statements. The follo

ID: 2598599 • 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 $50,000.

Borrowed $24,000 from a bank.

Bought merchandise from suppliers, paying $3,491 and promising to pay $4,664 next month.

Bought equipment from a manufacturer, paying $32,100 and promising to pay $4,400 in three months.

Paid $3,396 to merchandise suppliers that it had promised to pay.

Sold merchandise, receiving $17,971 cash and promises to pay of $4,179; the merchandise that was sold previously cost $11,075.

Paid a total of $532 for rent and insurance in advance.

Received $3,040 from customers who had promised to pay.

Paid $5,740 for wages, utilties, and other miscellaneous expenses.

Note: Ignore adjusting entries.

Please Answer:

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

Closing cash balance-

Opening balance- $52885

Add- sold stock - $50000

Borrowed - $24000

Merchandise- $17971

Promise to pay- $3040

Less- paid for wages- 5740

Paid rent and insurance - 532

Merchandise suppliers - 3396

Bought equipment- $ 32100

Bought merchandise- $3491

Closing balance- $102637

6) net income in January - $11075

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