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 had the following transactions:

Received $85,000 from a group of investors and received a $98,000 loan from the bank.

Bought $8,195 of merchandise, $3,877 for cash and $4,318 on account.

Bought equipment costing $9,800, paying the manufacturer $5,300 in cash and promising to pay the remaining $4,500 next month.

Sold merchandise for $20,360, of which $15,848 was for cash and $4,512 was on account; cost of the merchandise was $10,180.

Paid $3,780 to suppliers for merchandise previously bought on account.

Collected $2,818 from customers on account.

Paid wages of $5,650.

Paid a total of $510 for rent and insurance in advance.

Recorded depreciation of $1,900.

Recorded a total of $111 for rent and insurance that had expired.

5. What were total equities on September 30?

Explanation / Answer

X Compnay   Income Statement for the month ended Sep 30. Details Amt $ Sales Revenue                   20,360 Less Cost of Merchandise sold                 10,180 Gross Profit                 10,180 Less Wages Expense                   5,650 Rent & Insurance expense                       111 Depreciation Expense                   1,900 Net Operating income                     2,519            5 Calculation of Equity of Sep 30 Equity Received from Investors                   85,000 Add : Net Income added to Reatained Earning                   2,519 Total Equity Sep 30                 87,519

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