Question

X Company prepares monthly financial statements. The following is the company's July 1 Balance Sheet:

Balance Sheet

July 1

Assets		Equities
Cash	$35,468	Accounts Payable	$5,422
Accounts Receivable	5,138	Notes Payable	20,732
Inventory	10,785
Prepayments	3,667	Paid-In Capital	60,177
Equipment	68,219	Retained Earnings	36,946
Total Assets	$123,277	Total Equities	$123,277

The following were the company's July transactions:

1. borrowed $30,000 from a bank
2. bought equipment costing $10,000, paying the manufacturer $5,200 in cash and signing a note for $4,800
3. purchased a $6,000, five-year insurance policy, paying for three years in advance
4. paid back a previous loan for $3,620

6. What was the balance in the Cash account on July 31 [ignore adjusting entries]?

Tries 0/3

7. What were total assets on July 31 [ignore adjusting entries]?

Tries 0/3

Answer 1

6. July 31 Cash account balance = Beginning cash balance + $30,000 bank borrowing - $5,200 cash paid for equipment - Advance paid for insurance policy $3,600 ($6,000*3/5) - $3,620 loan repayment

= $35,468 + $30,000 - $5,200 - $3,600 - $3,620

= $53,048

7.

Cash	$53,048
Accounts receivable	$5,138
Inventory	$10,785
Prepayments	$7,267 ($3,667+$3,600)
Equipment	$78,219 ($68,219+$10,000)
Total assets	$154,457