Question

Bledsoe Company received $27,000 cash from the issue of stock on January 1, 2016. During 2016 Bledsoe earned $9,700 of revenue on account. The company collected $8,400 cash from accounts receivable and paid $6,600 cash for operating expenses. Based on this information alone, during 2016,

-Total assets increased by $38,500.
-Total assets increased by $1,800.
-Total assets increased by $30,100.
-Total assets did not change.

Answer 1

Considering the transactions provided, the total assets increased by $21,700 during 2016, due to issuing of stock, earning revenue on account, collecting receivables, and paying operating expenses. Therefore, none of the provided options are correct.

Step-by-step explanation:

When determining the impact on total assets based on the given transactions, we must assess each component separately:

• Issuing stock for cash increases assets by $27,000.
• Earning revenue on account represents an increase in accounts receivable, which is an asset, by $9,700.
• Collecting cash from accounts receivable converts one asset (receivables) into another (cash), but the total assets do not change as a result of this transaction. However, since only $8,400 cash was collected, receivables increase by the $1,300 difference ($9,700 revenue - $8,400 collected).
• Paying cash for operating expenses decreases assets by $6,600.

Now, we calculate the overall impact on total assets:

• +$27,000 (from stock issue)
• +$1,300 (from revenue earned but not collected)
• -$6,600 (from operating expenses)

Total change in assets = $27,000 + $1,300 - $6,600 = $21,700

So, given these transactions, the total assets increased by $21,700 which means none of the options provided in the question are correct.