Question

On January 1, Kirk Corporation had total assets of $425,000. During the month, the following activities occurred: Kirk Corporation acquired equipment costing $3,000, promising to pay cash for it in 60 days. Kirk Corporation purchased $1,750 of supplies for cash. Kirk Corporation sold land, which it had acquired 2 years ago. The land had cost $7,500 and it was sold for $7,500 cash. Kirk Corporation signed an agreement to rent additional storage space next month at a charge of $500 per month. What is the amount of total assets of Kirk Corporation at the end of the month? Multiple Choice $418,750 $428,000 $420,000 $429,750

Answer 1

Answer:

$428,000

Explanation:

The only movement that impact the total assets it's:

Kirk Corporation acquired equipment costing $3,000, promising to pay cash for it in 60 days.

Due to the equipment was finance by the supplier by 60 days it has a positive impact on assets and liabilities.

The others transactions:

• Kirk Corporation purchased $1,750 of supplies for cash, it has no impact because the supplies was paid with cash, so the impact on assets is zero.
• The land had cost $7,500 and it was sold for $7,500 cash.  The land it's a long term assets that was sold for cash, so it was converted to current assets in money.
• Kirk Corporation signed an agreement, the impact it's in the next month, so it has no impact the current month analized.