The following summary transactions occurred during January: Sold stock to invest

Question

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 $3,280 and promising to pay $5,161 next month.

Bought equipment from a manufacturer, paying $31,800 and promising to pay $4,100 in three months.

Paid $3,315 to merchandise suppliers that it had promised to pay.

Sold merchandise, receiving $17,445 cash and promises to pay of $4,935; the merchandise that was sold previously cost $11,190.

Paid a total of $543 for rent and insurance in advance.

Received $3,570 from customers who had promised to pay.

Paid $5,670 for wages, utilties, and other miscellaneous expenses.

Note: Ignore adjusting entries.
4. What was the cash balance on January 31? $100,076

5. What were total equities on January 31?

6. What was net income in January? $5,520

Assets Equities Cash $52,669     Accounts Payable $53,009     Accounts Receivable 32,826     Wages Payable 1,040     Inventory 78,694     Notes Payable 31,287     Prepaid Rent 6,239     Paid-In Capital 227,289     Equipment 213,115     Retained Earnings 70,918     Total Assets $383,543     Total Equities $383,543    

Explanation / Answer

journal entries

date

explanation

debit

credit

1-

cash

45000

common stock

45000

2-

cash

26000

notes payable-bank loan

26000

3-

inventory

8441

cash

3280

accounts payable payable

5161

4-

equipment

35900

cash

31800

notes payable

4100

5-

accounts payable payable

3315

cash

3315

6-

cash

17445

accounts receivables

4935

revenue from sales

22380

7-

cost of goods sold

11190

inventory

11190

8-

prepaid rent and insurance

543

cash

543

9-

cash

3570

accounts receivables

3570

10-

wages and other expenses

5670

cash

5670

Cash account

balance

52669

inventory

3280

common stock

45000

equipment

31800

notes payable-bank loan

26000

accounts payable payable

3315

revenue from sales

17445

prepaid rent and insurance

543

accounts receivables

3570

wages and other expenses

5670

balance

100076

total

144684

144684

Income statement

sales from revenue

22380

less cost of goods sold

11190

gross profit

11190

less expenses

5670

wages and other expenses

5670

net profit or income

5520

total of equities

paid in capital

227289

retained earning

70918

76438

net income

5520

total of equity

303727

journal entries

date

explanation

debit

credit

1-

cash

45000

common stock

45000

2-

cash

26000

notes payable-bank loan

26000

3-

inventory

8441

cash

3280

accounts payable payable

5161

4-

equipment

35900

cash

31800

notes payable

4100

5-

accounts payable payable

3315

cash

3315

6-

cash

17445

accounts receivables

4935

revenue from sales

22380

7-

cost of goods sold

11190

inventory

11190

8-

prepaid rent and insurance

543

cash

543

9-

cash

3570

accounts receivables

3570

10-

wages and other expenses

5670

cash

5670

Cash account

balance

52669

inventory

3280

common stock

45000

equipment

31800

notes payable-bank loan

26000

accounts payable payable

3315

revenue from sales

17445

prepaid rent and insurance

543

accounts receivables

3570

wages and other expenses

5670

balance

100076

total

144684

144684

Income statement

sales from revenue

22380

less cost of goods sold

11190

gross profit

11190

less expenses

5670

wages and other expenses

5670

net profit or income

5520

total of equities

paid in capital

227289

retained earning

70918

76438

net income

5520

total of equity

303727

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