Question

Company xyz made the following transactions 6 marks

 Borrowed loan of ksh 50000 to start a business
 Obtained Ksh 150,000 in cash from proceeds of sales
 Paid out ksh 240000 in form of salaries
 Purchased Ksh 600000 worth of machinery in cash
 Purchased a track valued at Ksh 1, 500 000 by paying Ksh 300000 in cash and getting a
loan for the reminder
 Paid rent of rent of Ksh 80000 and advertising of ksh 50,000 in cash each
Determine the value of the company’s assets, liability and equity​

Answer 1

Company XYZ

Total assets ksh 1,030,000

Total liabilities ksh 1,250,000

Total equity ksh (220,000)

Step-by-step explanation:

a) Data and Analysis:

Cash ksh 50,000 Loan payable ksh 50,000

Cash ksh 150,000 Sales revenue ksh 150,000

Salaries expense ksh 240,000 Cash ksh 240,000

Equipment ksh 600,000 Cash ksh 600,000

Track ksh 1,500,000 Cash ksh 300,000 Loan payable ksh 1,200,000

Rent Expense ksh 80,000 Advertising Expense ksh 50,000 Cash ksh 130,000

Assets:

Cash ksh 50,000

Cash ksh 150,000

Cash ksh (240,000)

Equipment ksh 600,000

Cash ksh (600,000)

Track ksh 1,500,000

Cash ksh (300,000)

Cash ksh (130,000)

Total assets ksh 1,030,000

Liabilities:

Loan payable ksh 50,000

Loan payable ksh 1,200,000

Total liabilities ksh 1,250,000

Equity:

Sales revenue ksh 150,000

Salaries expense ksh (240,000)

Rent Expense ksh (80,000)

Advertising Expense ksh (50,000)

Total equity ksh (220,000)