Question

During its first year of operations, a company entered into the following transactions:
- Borrowed $5,160 from the bank by signing a promissory note.
- Issued stock to owners for $11,600.
- Purchased $1,160 of supplies on account.
- Paid $560 to suppliers as payment on account for the supplies purchased.

1)

what is the amount of total assets at the end of the year? 2) What is the amount of total liabilities at the end of the year?

Answer 1

1) Total Assets at the end of Year $ 17,360

2) Total Liabilities at the end of Year $ 5,760

Working:

As per Balance Sheet Equation,
Assets = Liabilities + Stockholder's Equity
So,		Assets	=	Liabilities	+	Stockholder's Equity
Borrowed $5,160 from the bank by signing a promissory note		$       5,160		$       5,160
(Cash (Assets) will increase and notes payable(Liabilities) will also increase)
Issued stock to owners for $11,600.		$     11,600				11600
(Cash (Assets) will increase and Common Stock (Stockholder's Equity) will increase
Purchased $1,160 of supplies on account.		$       1,160		$       1,160
(Supplies (Assets) will increase and Accounts Payable (Liabilities) will also increase.
Paid $560 to suppliers as payment on account for the supplies purchased.		-560		-560
(Cash (Assets) will decrease and Accounts Payable (Liabilities) will decrease)
Total at the end of Year		$     17,360		$       5,760		$ 11,600