Question

The following transactions occurred during March, the first month of operations for Quality Galleries, Inc.: * Capital stock was issued in exchange for $356,000 cash. * Purchased $172,000 of equipment by making a $56,000 cash down payment and signing a note payable for the balance. * Made a $33,000 cash payment on the note payable from the purchase of equipment. * Sold a piece of equipment for cash of $14,000. The equipment was sold at cost, so there is no gain or loss on the sale.

1. Required information What is the balance in the Cash account at the end of March?
2. Required information What are total assets of Quality Galleries at the end of March?
3. Required information What is the balance in the Note Payable account at the end of March?
4. Required information What is the total owners' equity at the end of March?

Answer 1

The correct answer for option (1) = $281,000, option (2) = $158,000, option (3) = $83,000 and option (4) = $356,000.

Step-by-step explanation:

According to the scenario, the computation for the given data are as follows:

Total cash = $356,000

Purchased equipment = $172,000

Cash down payment of equipment = $56,000

Cash payment for note payable = $33,000

Cash by sell a piece of equipment = $14,000

(1). So, we can calculate the balance in cash account by using following method:

Cash balance = Total cash - Cash down payment of equipment - Cash payment for note payable + Cash by sell a piece of equipment

= $356,000 - $56,000 - $33,000 + $14,000

= $281,000

(2). So, we can calculate the total assets by using following method:

Total Assets = Purchased equipment - Cash by sell a piece of equipment

= $172,000 - $14,000

= $158,000

(3). So, we can calculate the balance in note payable account by using following method:

Note payable balance = Purchased equipment - Cash down payment of equipment - Cash payment for note payable

= $172,000 - $56,000 - $33,000

= $83,000

(4). So, we can calculate the total owner's equity by using following method:

Total Owner's equity = Total cash

= $356,000