Question

X Company was created on September 1 and prepares monthly financial statements. During September, X Company...

X Company was created on September 1 and prepares monthly financial statements. During September, X Company

  1. issued stock to investors for $86,000,
  2. borrowed $81,000 from a bank,
  3. bought merchandise that it planned to sell, paying $3,078 and promising to pay $5,355 in October,
  4. bought equipment, paying $5,900 and promising to pay $4,300 in December,
  5. paid $3,548 that it had promised to pay to suppliers for previous purchases on account,
  6. sold merchandise, receiving cash of $15,496 and promises to pay from customers of $4,894; the merchandise that was sold had cost $10,195,
  7. paid off a loan for $3,330 [ignore interest],
  8. received $3,267 from customers who had promised to pay,
  9. paid $5,870 for wages, utilities, and other miscellaneous expenses.

What were total assets on September 30 [assume no adjusting entries on September 30]?

What was Net Income in September [assume no adjusting entries on September 30]?

Homework Answers

Answer #1
Income Statement
Sales 20390
Less: Cost of goods sold 10195
Gross margin 10195
Less: Expenses
wages , utilities and miscellaneous expenses 5870
Net income 4325
Calculate Total Assets
Equipment (5900+4300) 10200
Cash 164037
Accounts receivable 4894
Total Assets 179131

Workings

Calculate cash balance
Common Stock issued 86000
Bank borrowings 81000
cash paid towards merchandise -3078
Cash paid towards Equipment purchases -5900
paid towards accounts payable -3548
Sales revenue 15496
Loan repaid -3330
Accounts receivable 3267
expenses paid -5870
Total cash 164037
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