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

ID: 2484830 • Letter: X

Question

X Company was created on September 1 and prepares monthly financial statements. During September, the company had the following transactions:

Received $83,000 from a group of investors and received a $81,000 loan from the bank.

Bought $8,887 of merchandise, $3,853 for cash and $5,034 on account.

Bought equipment costing $9,000, paying the manufacturer $5,000 in cash and promising to pay the remaining $4,000 next month.

Sold merchandise for $20,240, of which $16,008 was for cash and $4,232 was on account; cost of the merchandise was $10,120.

Paid $3,466 to suppliers for merchandise previously bought on account.

Collected $2,697 from customers on account.

Paid wages of $5,740.

Paid a total of $583 for rent and insurance in advance.

Recorded depreciation of $1,800.

Recorded a total of $122 for rent and insurance that had expired.

5. What were total equities on September 30?

6. What was Net Income in September?

6) We calculate net income as

We sold merchandise worth 20240

cost of merchandise sold = 10120

Gross profit = 20240 - 10120, = 10120

Also we are given operating expenses as

wages = 5740

Depreciation = 1800

Expired rent and insurance = 122

Total operating expenses = 5740 + 1800 + 122, = 7662

Net income = gross profit - operating expenses

= 10120 - 7662, = 2458

so net income = 2458

Tootal equity at end of september = amount innvested by investors + net income earned

= 83000 + 2458,

= 85458

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