Question

During its first month of operations, Donald Company borrowed $100,000 from a bank, and then purchased an equipment costing $40,000 by paying cash of $20,000 and signing a long term note for the remaining amount. During the month, the company also purchased Inventory for $30,000 on credit, performed services for clients for $10,000 on account, paid $15,000 cash for accounts payable, and paid $30,000 cash for utilities.

What is the amount of total assets at the end of the month?

Select one:

A. $125,000

B. $115,000

C. $135,000

D. $ 95,000

Answer 1

Answer:

B. $115,000

Explanation:

                                                                           

Borrowed        100000                        Total Assets   =      100000  

Equipment purchased  40000  

Cash paid                      -20000                          

Net increase in Assets  20000          Total Assets=100000+20000= 120000          

Inventory on credit        30000         Total Assets=120000+30000= 150000

Service Account Recv.   10000           Total Assets=150000+10000=160000

Cash Paid Acc. pay       -15000         Total Assets=160000-15000=145000

Cash paid utilities          -30000        Total Assets=145000-30000=115000