Question

At the beginning of April, Warren Corporation's assets totaled $240,000 and liabilities totaled $60,000. During April the following summarized transactions occurred: Additional shares of stock were sold for $20,000 cash. A building costing $95,000 was purchased using $10,000 cash and by signing an $85,000 long-term note payable. Short-term investments costing $9,000 were purchased using cash. $10,000 was paid to an employee as a loan; the employee signed a six-month note in exchange for the loan. How much are Warren's total assets at the end of April?

Answer 1

Warren Corporation's total assets at the end of April are $105,000, including cash, building, and short-term investments.

Step-by-step explanation:

To calculate Warren Corporation's total assets at the end of April, we need to consider the transactions that occurred during the month.

Starting with the initial assets and liabilities:

• Assets: $240,000
• Liabilities: $60,000

Now, let's analyze the transactions:

1. The sale of additional shares of stock for $20,000 increased cash:

• Assets: +$20,000

The purchase of a building costing $95,000 was made using $10,000 cash and a long-term note payable of $85,000:

• Assets:
  • Cash: -$10,000
  • Building: +$95,000
• Liabilities:
  • Long-term note payable: +$85,000

The purchase of short-term investments costing $9,000 was made using cash:

• Assets:
  • Cash: -$9,000
  • Short-term investments: +$9,000

A loan of $10,000 was given to an employee, who signed a six-month note in exchange for the loan:

• Assets:
  • Notes receivable: +$10,000
• Liabilities:
  • Notes payable: +$10,000

Now, let's calculate the total assets at the end of April:

• Cash: $20,000 - $10,000 - $9,000 = $1,000
• Buildings: $95,000
• Short-term investments: $9,000
• Total assets: $1,000 + $95,000 + $9,000 = $105,000

Therefore, Warren Corporation's total assets at the end of April are $105,000.

Answer 2

The Warren's total assets at the end of April is $345,000

Step-by-step explanation:

The computation of the ending total assets value is shown below:

= Total assets - sale of stock + machine purchased - cash payment for purchase of building + purchase of short term investment - cash payment for purchase of short term investment - cash paid to the employee as a loan + notes issued

= $240,000 + $20,000 + $95,000 - $10,000 + $9,000 - $9,000 - $10,000 + $10,000

= $345,000