A company\'s January 1, 2014 balance sheet reported total assets of $159,000 and

Question

A company's January 1, 2014 balance sheet reported total assets of $159,000 and total liabilities of $64,500. During January 2014, the company completed the following transactions: (A) paid a note payable using $14,500 cash (no interest was paid); (B) collected a $13,500 accounts receivable; (C) paid a $5,900 accounts payable; and (D) purchased a truck for $5,900 cash and by signing a $24,500 note payable from a bank. The company's January 31, 2014 balance sheet would report which of the following?

Explanation / Answer

All four will have their effect on balance sheet

a) In first case cash will be reduced by 14500 in assets

and note payable will also be reduced by 14500 in Liabilities

as we are paying our liability

b) In second case our cash will increase by 13500

and corrospondingly our accounts receivables will be reduced by 13500

as this is conversion of one asset into another asset

c) In third case our accounts payable (liabilities) and

cash (asset) both will decrease by 5900 of the amount paid

as we are paying our liability

d) In forth case our cash will be reduced by 5900 amount paid in cash

Note Payable ( liabilities will increase by 24500)

and total amount will be added to truck account ( 5900 + 24500) = 30400

as we purchased an asset on cash and credit both

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.