Question

On March 3, Cobra Inc. purchased a desk for $330 on account. On March 22, Cobra purchased another desk for $460 also on account, and then on March 24, Cobra paid $460 on account. At the end of March, what amount should Cobra report for desks (assuming these two desks were the only desks they had)

Answer 1

Answer:

Cobra Inc.

The amount that Cobra should report for desks is $790.

Explanation:

a) Data and Calculations:

Purchases on March 3 =    $330

Purchases on March 22 = $460

Payment on March 24 =   ($460)

Amount unpaid =               $330

b) The amount that Cobra Inc. should report as Accounts Payable at the end of March is $330.  However, in reporting for the desks, it should report $790 in assets.  This amount represents the value of desks that the company is possessing, which is financed by company cash and creditors.