6. Godiva & Company was recently formed with a $5,000 investment in the company by stockholders. The company then borrowed $2,000 from a local bank, purchased $1,000 of supplies on account, and also purchased $5,000 of equipment by paying $2,000 in cash and signing a promissory note for the balance. Based on these transactions, the company's total assets are:

Question

Gemma Petty

Business

30 July, 15:29

6. Godiva & Company was recently formed with a $5,000 investment in the company by stockholders. The company then borrowed $2,000 from a local bank, purchased $1,000 of supplies on account, and also purchased $5,000 of equipment by paying $2,000 in cash and signing a promissory note for the balance. Based on these transactions, the company's total assets are:

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Gideon Davies · Answer 1

Godiva& amp Company $

Cash (capital) 5,000.00

Cash (loan) 2,000.00

Inventory 1,000.00

Equipment 5,000.00

Cash (payment for equipment (2,000.00)

Total Assets 11,000.00

Explanation:

The approach I took in computing total assets for the company was to reflect the impact of each transaction on the asset of the company, where asset increases is a positive figure and negative when it reduces for instance payment of $2000 in respect of equipment purchase.