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 Equities Assets Cash Accounts Receivable Inventory Prepaid Rent Equipment Total Assets $53,059 Accounts Payable 34,435 Wages Payable 84,882 Notes Payable 5,242 Paid-In Capital 203,902 Retained Earnings $62,084 1,239 30,044 227,687 60,466 $381,520 $381,520 Total Equities The following summary transactions occurred during January: 1. Sold stock to investors for $43,000 2. Borrowed $26,000 from a bank. 3. Bought merchandise from suppliers, paying $3,416 and promising to pay $5,211 next month 4. Bought equipment from a manufacturer, paying $38,000 and promising to pay $4,300 in three months 5. Paid $3,421 to merchandise suppliers that it had promised to pay 6. Sold merchandise, receiving $17,944 cash and promises to pay of $4,236; the merchandise that was sold previously cost $11,090 7. Paid a total of $564 for rent and insurance in advance 8. Received $3,005 from customers who had promised to pay 9. Paid $5,670 for wages, utilties, and other miscellaneous expenses. Note: Ignore adjusting entries 4. What was the cash balance on January 31 Submit Answer Tries 0/3 5. What were total equities on January 31? Tries 0/3 Submit Answer 6. What was net income in January? Submit Answer Tries 0/3

Explanation / Answer

Particulars Amount($) Equities Balance as on 1st January 413311 Less: Sold stock to investors -43000 Add: Borrowed from Bank 26000 Add: Bought Merchandise from supplier 5211 Add: Bought Equipment O/S payable in 3 months 4300 Less: Payment made to merchandise supplier -3421 Less: Paid wages payable -1239 Equities Balance as on January 31 444162 Particulars Amount($) Cash Balance as on 1st January 53059 Add: Borrowed from bank 26000 Less: Bought Merchandise from supplier -3416 Less: Bought Equipment -38000 Less: Payment made to merchandise supplier -3421 Add: Sold Merchandise 17944 Less: Advance paid for rent and insurance -564 Add: Received from customers 3005 Less: Paid for Wages, utilities & Misc. Exp. -5670 Cash Balance as on January 31 48937 Particulars Amount($) Retained Earnings as on 1st January 60466 Add: Sold stock to investors 43000 Less: Bought Merchandise -8627 Add: Sales (17944+4236) 22180 Less: Paid for Wages, utilities & Misc. Exp.(note) -4431 Net Income as on January 31 112588 Note: It is assumed that wages payable are paid first and hence not considered in calculation of net income

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