Question

he Logan Company reported the following ending information after its first month of operations: Revenues $168,000 Inventory $18,600 Equipment ? Cash 22,800 Dividends 1,000 Payroll expense 110,000 Common stock 58,000 Notes payable 10,000 Rent expense 30,200 What amount of equipment would the company report in its financial statements?

Answer 1

Answer:

$53,400

Explanation:

The computation of the equipment is shown below:

First we have to calculate the net income, retained earning balance that are shown below:

As we know that

Net income = Revenues - Rent expense - Payroll expense

= $168,000 - $30,200 - $110,000

= $27,800

Now the retained earning is

= Net income - dividend paid

= $27,800 - $1,000

= $26,800

And, the accounting equation is

Total assets = Liabilities + Stockholder's Equity

where,

Total assets = Equipment + Inventory + Cash

                    = Equipment + $18,600 + $22,800

                    = Equipment +  $41,400

Liabilities = Note payable

                = $10,000

Stockholder's Equity  = Common stock + Retained earnings

                                   = $58,000 + $26,800

                                   = $84,800

Now the equipment is

 Equipment +  $41,400 = $10,000 + $84,800

So, the equipment is $53,400