Question

Park & Company was recently formed with a $5,400 investment in the company by stockholders. The company then borrowed $2,400 from a local bank, purchased $1,040 of supplies on account, and also purchased $5,400 of equipment by paying $2,040 in cash and signing a promissory note for the balance. Based on these transactions, the company's total assets are:

Answer 1

Answer:

Net assets after above transactions = $11,160

Explanation:

Provided information we have,

Investment by stockholder's = $5,400

Increase in cash, increase in assets.

Amount borrowed will increase liability and bank balance = $2,400

Purchase of supplies, will reduce cash and increase supplies inventory thus, no impact on assets.

Purchase of equipment of $5,400 will increase equipment and assets by same.

Cash paid for equipment will decrease the cash and decrease the assets = $2,040

Net impact on assets = $5,400 + $2,400 + 0 + $5,400 - $2,040 = $11,160

Net assets after above transactions = $11,160