Question

McmanusCo began business this year and entered into the following transactions during the year. McmanusCo issued common stock in exchange for cash of $80,000 from stockholders, borrowed $40,000 from a bank, bought $12,000 of inventory on account, and purchased $32,000 of equipment by paying $12,000 in cash and issuing a note for the remainder. What is the amount of total assets to be reported on the balance sheet at the end of the year?

Answer 1

Comm stock issued for cash = $80,000

Bank borrowings = $40,000

Inventory bought on account = $12,000

Equipment purchased = $32,000

Cash paid for equipment = $12,000

Ending cash balance = Comm stock issued for cash + Bank borrowings - Cash paid for equipment

= 80,000+40,000-12,000

= $108,000

Total assets at the end of the year = Cash + Inventory + Equipment

= 108,000+12,000+32,000

= $152,000

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