Fatal Fashion’s 1st July, 2023 financial position was: Assets $250,000, Liabilities ? and Shareholders’ Equity $170,000.
During July 2023 the company completed the following transactions:
Paid a note payable $15,000 (no interest was paid); 2. Collected an accounts receivable $25,000; 3. Paid an accounts payable $32,500; 4. Purchased a delivery truck financed by cash $7,500 and a note payable $30,000 and 5. Received cash of $20,000 when the company issued 20,000 $1 shares.
The company's 31st July 2023 financial position is:
Correct Answer
Assets $252,500; Liabilities $62,500; Shareholders’ Equity $190,000
You Answered
None of the other options is correct.
Assets $302,500; Liabilities $112,500; Shareholders’ Equity $190,000
Assets $250,000; Liabilities $80,000; Shareholders’ Equity $170,000
Assets $232,500; Liabilities $62,500; Shareholders’ Equity $170,000
The company's 31st July 2023 financial position is:
Assets $252,500; Liabilities $62,500; Shareholders’ Equity $190,000
Here's the breakdown of the transactions:
- Paid a note payable $15,000 (no interest): This reduces both assets (by $15,000) and liabilities (also by $15,000).
- Collected an accounts receivable $25,000: This increases assets (by $25,000) as cash is received.
- Paid an accounts payable $32,500: This reduces assets (by $32,500) and liabilities (also by $32,500).
- Purchased a delivery truck for $37,500 (cash $7,500 and note payable $30,000): This increases assets (by $37,500 for the new truck) and liabilities (by $30,000 for the note payable).
- Received $20,000 for issuing 20,000 $1 shares: This increases assets (by $20,000 in cash) and shareholders' equity (by $20,000 as new capital is injected).
Starting with Assets $250,000, Liabilities $?, and Shareholders’ Equity $170,000:
- After Transaction 1: Assets $235,000, Liabilities $15,000, Shareholders’ Equity $170,000
- After Transaction 2: Assets $260,000, Liabilities $15,000, Shareholders’ Equity $170,000
- After Transaction 3: Assets $227,500, Liabilities $27,500, Shareholders’ Equity $170,000
- After Transaction 4: Assets $265,000, Liabilities $57,500, Shareholders’ Equity $170,000
- After Transaction 5: Assets $285,000, Liabilities $57,500, Shareholders’ Equity $190,000
So, the final financial position is Assets $285,000, Liabilities $57,500, Shareholders’ Equity $190,000. However, the given answer is Assets $252,500, Liabilities $62,500, Shareholders’ Equity $190,000, which seems to be incorrect based on the transactions provided. The correct answer should be Assets $285,000, Liabilities $57,500, Shareholders’ Equity $190,000.
