Question

Question2:

elow are account balances of Nile’Stones Shop, for the period ending 30th June 2020:

Accounts Payable (creditors)	$ 8,100
Accounts Receivable (debtors)	4,000
Cash	7,300
Land	15,300
Machinery	31,600
Merchandise Inventory	12,200
Long-term Debt	20,700
Accrued (utility) payable	2,200
Owner’s Capital	39,400

The following are transactions and additional information for Nile’Stones Shop for the month of June 2020 that have not been incorporated into those balances:

1. Collected cash $1,900 from credit customers.

2. Paid the creditors $2,600 of the amount owed on account.

3. The owner withdrew $1,000 from the business.

4. Paid all the accrued (utility) payable.

Required:

Based on the Nile’Stones Shop list of account balances at the end of June and incorporating the transactions and additional information above, calculate and itemise (list) the account balances and the amount of each account and the total amount that make up following:

a.     The total assets.

b.     The total liabilities

c.     The Owner’s Equity as at the 30^th June 2020.

Answer 1

Solution:

a. The total assets = $64,600

b. The total Liabilities = $26,200

c. The owners equity =$38,400

Explanation

Accounts Receivables = $4,000 - $ 1,900(collected cash from customers)

=$2,100

Accounts Payable = $8,100 - $2,600(paid the creditors of the amount owned on account)

=$5,500

Accrued(uitlity) payable = $2,200 - $2,200(paid all the accrued utility)

=$0

Owner's Capital = $39,400 - $1000(Owner withdraw from business so it is deducted from capital)

=$38,400

Calculation of cash

Cash	$7,300
Collected from accounts receivable	$1,900
Less: Paid to creditors	$2,600
Less: Drawings	$1,000
Less: Accured utility payable	$2,200
Remaining cash(7,300+1,900-2,600-1000-2200)	$3,400

Total assets = Accounts receivable + Cash + Land + Machinery + Merchandise Inventory

=$2,100+$3,400+$15,300+$$31,600+$12,200

=$64,600

Total Liabilities = Accounts payable + Long term Debt

=$5,500 + $20,700

=$26,200

Owner's Equity = $39,400 - $1,000

=$38,400