Question

X Company started business on June 1 and prepares monthly financial statements.

The following were June transactions: received $49,000 from a group of investors bought $8,339 of merchandise, $3,466 for cash and $4,873 on account sales were $42,000, of which $37,965 were for cash and $4,035 were on account; Cost of Goods Sold was $23,100 paid $3,374 to suppliers for merchandise previously bought on account collected $2,590 from customers on account paid expenses totalling $9,792

4. What were total assets on June 30?

5. What was Net Income in June?

Answer 1

Answer:

4. Total Assets on June 30 is computed as:

Cash	+	Merchandise	+	Accounts receivable	=	Total Assets
$49,000						$49,000
($3,466)		$8,339				$4,873
$37,965		($23,100)		$4,035		$18,900
($3,374)						($3,374)
$2,590				($2,590)		$0
($9,792)						($9,792)
$72,923		($14,761)		$1,445		$59,607

Thus, Total Assets on June 30 = $59,607

5.) Net Income in June is computed as:

Sales	$42,000
Less: Cost of goods sold	$23,100
Gross profit	$18,900
Less:Expense	$9,792
Net Income	$9,108

Thus Net Income on June 30 = $9,108