Question

X Company was created on September 1 and prepares monthly financial statements. During September, X Company issued stock to investors for $98,000, borrowed $83,000 from a bank, bought merchandise that it planned to sell, paying $3,416 and promising to pay $5,166 in October, bought equipment, paying $5,100 and promising to pay $4,800 in December, paid $3,603 that it had promised to pay to suppliers for previous purchases on account, sold merchandise, receiving cash of $16,879 and promises to pay from customers of $4,881; the merchandise that was sold had cost $10,880, paid off a loan for $3,370 [ignore interest], received $3,727 from customers who had promised to pay, paid $5,470 for wages, utilties, and other miscellaneous expenses. 4. What were total assets on September 30 [assume no adjusting entries on September 30]? Tries 0/2 5. What was Net Income in September [assume no adjusting entries on September 30]?

Answer 1

Answer:

Income Statement
Sales(16,879+4881)	21,760
Less: Cost of goods sold	10,880
Gross margin	10,880
Less: Expenses
wages , utilities and miscellaneous expenses	5,470
Net income	5,410

Calculate Total Assets
Equipment (5100+4800)	9,900
Cash	1,80,647
Accounts receivable	4,881
Total Assets	1,95,428

Workings
Calculate cash balance
Common Stock issued	98,000
Bank borrowings	83,000
cash paid towards merchandise	-3,416
Cash paid towards Equipment purchases	-5,100
paid towards accounts payable	-3,603
Sales revenue	16,879
Loan repaid	-3,370
Accounts receivable	3,727
expenses paid	-5,470
Total cash	1,80,647