X Company is a merchandiser and prepares monthly financial statements. The follo

Question

X Company is a merchandiser and prepares monthly financial statements. The following is its balance sheet at the beginning of January Balance Sheet January 1 Assets Cash Accounts Equities $50,946 Accounts Payable $53,908 Receivable Inventory Prepaid Rent Equipment Total Assets $392,064 Total Equities $392,064 34,143 Wages Payable 1,415 84,949 Notes Payable 31,986 5.492 Paid-In Capital 236,154 216,534 Retained Earnings 68,601 The following summary transactions occurred during January: Sold stock to investors for $48,000. 2. 1. Borrowed $22,000 from a bank. 3. Bought merchandise from suppliers, paying $3.953 and promising to pay $4,342 next month 4. Bought equipment from a manufacturer, paying $35,900 and promising to pay $4,900 in three months. Paid $2,810 to merchandise suppliers that it had promised to pay 6. 5. Sold merchandise, receiving $17,535 cash and promises to pay of $4,035, the merchandise that was sold previously cost $10,785 7. Paid a total of $529 for rent and insurance in advance. 8. Received $2,853 from customers who had promised to pay 9. Paid $5,790 for wages, utilties, and other miscellaneous expenses. Note: Ignore adjusting entries. 4. What was the cash balance on January 31? Submi Answer Tries 0/3 5. What were total equities on January 31? Submit Answer Tries 0/3 6. What was net income in January? Tries 0/3 Submit Answer

Explanation / Answer

1. Calculation of Cash Balance as on Jan 31st

Cash A/C

2. Calculations of Total Equity as on Jan 31
Total Equity as on Jan 1 = $392064
Add; Paidup Capital = $48000
Add; Notes Payable =   $22000
Add; Accounts Payables = $4342
Add; Accounts Payables = $4900 (on equipment purchased)
Less; Accounts Payable = $2810 (Merchandise payment)
Total Equity on 31st Jan = $468496

3. Calculations of Net Income of January

Revenue = $17535 + $4035 = $21570
COGS = Merchandise costs = $10785
Gross Profit = $ 10785
Less wages exp = $ 5790
Net Income of January = $ 4995

Particulars Debit Credit Cash in Hand as on 1 jan $50946 1. Paid Up Capital (Sold Stock, Assuming stock means shares) $48000 2. Notes Payables (Borrowed from Bank) $22000 3. Purchase $3953 4. Equipment $35900 5. Accounts Payable $2810 6. Sales 17535 7. Prepaid rent $529 8. Accounts Receivables $2853 9. Wages $5790 Balance C/f $92352 Total $141334 $141334 Balance b/f (Closing Cash balance on Jan 31) $92352

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