Question

In: Accounting

On January 1, 2008, a company’s balance sheet showed the following: &nbs

On January 1, 2008, a company’s balance sheet showed the following:

Assets $100

Liabilities 40

Stockholders’ equity 60

During January, the company had the following transactions:

(a) purchased supplies on account, $10

received cash from customers for services to be performed in February, $20
purchased a new computer costing $75 by paying $15 in cash and signing a note payable for

the balance

paid dividends of $5

The company’s January 31, 2008 Balance Sheet will show

Assets Liabilities Stockholders’ equity

a. $200 $130 $ 70

b. $185 $130 $ 55

c. $180 $130 $ 50

d. $145 $ 90 $ 55

e. none of the above

Expert Solution

Balances as at 1st jan 2008

Assets		100
Liabilities		40
Stockholder's Equity		60

Transactions during Jan
				Result
a	Supplies	10		Increase in Asset account
	To Accounts Payable		10	Increase in Liability account

b	Cash account	20		Increase in Asset account
	To Unearned Revenue		20	Increase in Liability account

c	Computer account	75		Increase in Asset account
	To Cash		15	Decrease in Asset account
	To Notes Payable		60	Increase in Liability account

d	Dividend	5		Decrease in Stockholder's Equity
	To Cash		5	Decrease in Asset account

New Balances as at 31st Dec

	Asset	Liability	Stockholder's Equity
Opening Balance	100	40	60
Transactions:-
a	10	10
b	20	20
c	75	60
	-15
d	-5		-5
Closing Balance	185	130	55

Hence the answer is "b"

ekkarill92 answered 9 months ago

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