X company was created on September 1 and prepares monthly financial statements.

Question

X company was created on September 1 and prepares monthly financial statements. During September, the company and the following transactions: Received $85,000 from a group of investors and received a $8,803 of merchandise, $3,414 for cash and $5,389 on account. Bought equipment costing $10,300, paying the manufacturer $5,500 in cash and promising to pay the remaining $4,800 next month. Sold merchandise for $20,350, of which $16,020 was for cash and $4,330 was on account; cost of the merchandise was $10,175. Paid $3,917 to suppliers for merchandise previously bought on account. Collected $2,661 from customers on account. Paid wages of $5,660. Paid a total of $583 for rent and insurance in advance. Recorded depreciation of $1,950. Recorded a total of $117 for rent and insurance that had expired. What were total equities on September 30? What was Net Income in September?

Explanation / Answer

Ans 5 Total liabilities & Equities on september 30 Transaction No Particulars Amt 1 Received from group of Investors 85000 1 Loan from Bank 94000 3 Accounts payable 4800 2 &5 Accounts payable(5389-3917) 1472 Net Income 2448 Total 187720 Ans B Ans 6 Income Statement Transaction No Particulars Amt 4 Sales 20350 4 Less: Cost of mercandise Sold 10175 Gross profit 10175 Less: Opearting expenses 7 wages Expense 5660 9 Depreciation expense 1950 10 Rent & insurance Expense 117 Total operating expenses 7727 Net income 2448 Ans E

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