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:

The following summary transactions occurred during January:

Sold stock to investors for $45,000.

Borrowed $26,000 from a bank.

Bought merchandise from suppliers, paying $3,330 and promising to pay $5,301 next month.

Bought equipment from a manufacturer, paying $33,400 and promising to pay $5,000 in three months.

Paid $3,707 to merchandise suppliers that it had promised to pay.

Sold merchandise, receiving $17,197 cash and promises to pay of $4,353; the merchandise that was sold previously cost $10,775.

Paid a total of $530 for rent and insurance in advance.

Received $2,564 from customers who had promised to pay.

Paid $5,370 for wages, utilties, and other miscellaneous expenses.

Note: Ignore adjusting entries.
4. What was the cash balance on January 31?

5. What were total equities on January 31?

6. What was net income in January?

                                                     Balance Sheet                                                         January 1

Explanation / Answer

4. Cash balance on Jan 31

5.

6. Net income in January

Beginning balanace $53842 Add: Sale of stock 45000 Borrowing from bank 26000 Sale of merchandise 17197 Collection from customers 2564 144603 Less: Payment for merchandise (3330+3707) 7037 Payment for equipment 33400 Payment for rent 530 Payment for wages, utilties, and other miscellaneous expenses 5370 Cash balance on Jan 31 $98266

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