Question

X Company started business on June 1 and prepares monthly financial statements. The following were June transactions: received $41,000 from a group of investors bought $8,876 of merchandise, $3,254 for cash and $5,622 on account sales were $40,600, of which $36,144 were for cash and $4,456 were on account; Cost of Goods Sold was $21,112 paid $3,942 to suppliers for merchandise previously bought on account collected $2,725 from customers on account paid expenses totalling $7,015
1. What were total assets on June 30?

Tries 0/3 Submit Answer
2. What was Net Income in June?

Answer 1

Answer:

See below.

Explanation:

We make the following calculations to find the total assets,

Cash = 41,000 - 3,254 + 36,144 - 3942 + 2725 - 7015 = $65,658

This is the total ending cash balance. All the payments have been deducted and all the receipts have been added.

Accounts receivables = (40600 - 36,144)  - 2,725 = $1,731

This is the closing receivables balance. Collections have been deducted and were added to the cash account in previous calculation.

We assume that all the merchandise has been sold and there is no closing inventory.

Total assets = Cash + receivables = $67,389

Net income = Sales - cost of goods sold - expenses = $12,473

Hope that helps.