Question

8 pt X Company, a merchandising company, had the following transactions during the year: 1. Received $8,425 in cash contributions from the owners 2. Purchased $8,463 worth of merchandise on account from suppliers. 3. Sold merchandise on account to customers for $12,148; the merchandise cost X Company $8,504 4. Paid $3,520 to suppliers for merchandise that X Company had previously purchased on account 5. Collected $3,100 from customers who had previously purchased merchandise on account 6. Bought equipment for $9,480 with 7. Paid wages of $1,126. 8. Recognized the expiration of $580 of prepaid rent. down payment of $5,474 and a $4,006 loan from the bank. If total equities at the beginning of the year were $12,796, what were total equities at the end of the year? EO $22,144 FO $32,108 9. AO $5,009 BO $7,264 CO $10,532 DO $15,272

Answer 1

Total Equities at the beginning 12,796 Add: Increase in the equity due to the transactions 10,363 23,159

Workings: Stockholders' Equity Transactions Liabilities Assets $ 8,425 1 Cash $ 8,425 Equity 2 Inventory 3 Accounts receivable Inventory Accounts Payable $ 8,463 8,463 $ 12,148 $ (8,504) Accounts Payable $(3,520) 4 cash (3,520) $ 5 cash 3,100 Accounts Receivable $ (3,100) $ 6 Equipment 9,480 $ 4,006 $ cash (5,474) Loan 7 Cash $ (1,126) Retained Earnings $1,938 $10,363 8 Prepaid rent (580) $ $ 8,949 + 19,312 Sales 12,148 less: Cost of goods 8,504 $ Less: Wages 1,126 Less: Prepaid rent 580 Net income (trf to $ retained earnings) 1,938