Question

Park & Company was recently formed with a $6,100 investment in the company by stockholders in...

Park & Company was recently formed with a $6,100 investment in the company by stockholders in exchange for common stock. The company then borrowed $3,100 from a local bank, purchased $1,110 of supplies on account, and also purchased $6,100 of equipment by paying $2,110 in cash and signing a promissory note for the balance. Based on these transactions, the company's total assets are:

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Answer #1

Solution:

Total Assets = Total Current Assets + Total Fixed Assets

Total Assets = Cash Received from Stockholders + Cash borrowed from bank + Supplies Purchased on Account + (Equipment PUrchased - Cash Paid for Equipment)*

= $6,100 + $3,100 + $1,110 + $6,100 - $2,110

= $14,300

Total Assets = $14,300

*Note --- Equipment was purcahsed for $6,100 by paying cash...since cash is paid from the cash balance. Cash balance is reduced by $2,110.

Hope the above calculations, working and explanations are clear to you and help you in understanding the concept of question.... please rate my answer...in case any doubt, post a comment and I will try to resolve the doubt ASAP…thank you

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