X Company was created on September 1 and prepares monthly financial statements.
ID: 2484865 • Letter: X
Question
X Company was created on September 1 and prepares monthly financial statements. During September, the company had the following transactions:
Received $92,000 from a group of investors and received a $83,000 loan from the bank.
Bought $8,754 of merchandise, $3,204 for cash and $5,550 on account.
Bought equipment costing $10,500, paying the manufacturer $6,000 in cash and promising to pay the remaining $4,500 next month.
Sold merchandise for $20,890, of which $16,086 was for cash and $4,804 was on account; cost of the merchandise was $10,445.
Paid $3,221 to suppliers for merchandise previously bought on account.
Collected $2,773 from customers on account. Paid wages of $5,340.
Paid a total of $501 for rent and insurance in advance.
Recorded depreciation of $1,700.
Recorded a total of $104 for rent and insurance that had expired.
5. What were total equities on September 30?
6. What was Net Income in September?
Explanation / Answer
6. Calculation of Net income in September:
Sales Revenue
$ 20,890
Less: Cost of Merchandise sold
$ (10,445)
Less: Wages expenses
$ (5,340)
Less: Depreciation
$ (1,700)
Less: Rent and insurance expired
$ (104)
Net income
$ 3,301
5. Calculation of Total Equities as on September 30:
Received from investors
$ 92,000
Add: Net income
$ 3,301
Total Equities as on September 30
$ 95,301
6. Calculation of Net income in September:
Sales Revenue
$ 20,890
Less: Cost of Merchandise sold
$ (10,445)
Less: Wages expenses
$ (5,340)
Less: Depreciation
$ (1,700)
Less: Rent and insurance expired
$ (104)
Net income
$ 3,301
5. Calculation of Total Equities as on September 30:
Received from investors
$ 92,000
Add: Net income
$ 3,301
Total Equities as on September 30
$ 95,301
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