QUESTION #9: X Company, a merchandising company, had the following transactions

Question

QUESTION #9:

X Company, a merchandising company, had the following transactions during the year:

1. Received $8,199 in cash contributions from the owners.

2. Purchased $8,218 worth of merchandise on account from suppliers.

3. Sold merchandise on account to customers for $10,499; the merchandise cost X Company $8,399.

4. Paid $3,647 to suppliers for merchandise that X Company had previously purchased on account.

5. Collected $3,823 from customers who had previously purchased merchandise on account.

6. Bought equipment for $9,907 with a down payment of $5,106 and a $4,801 loan from the bank.

7. Paid wages of $1,076. 8. Recognized the expiration of $544 of prepaid rent.

If total equities at the beginning of the year were $14,305, what were total equities at the end of the year?

Explanation / Answer

Net income for the period: Sales revenue 10499 Less: Cost of Goods sold 8399 Gross Margin 2100 Less: Wages 1076 Rent expense 544 Net income 480 Equity at the end: Equity in the beginning of year 14305 Add: Contribution made 8199 Add: Net income 480 Equity at the end: 22984

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