Reference no: EM132788501

X Company, a manufacturer, prepares monthly financial statements. On August 1, total equities were $112,045. The following transactions occurred during August:

1. Issued additional shares of stock for $112,000.
2. Acquired $8,200 of direct materials, 51% of of which was acquired on open accounts; the rest was paid in cash. 
3. A one year rental agreement was signed for $7,300 per month. Rent for the first two months was paid in advance. 
4. Product sales were $102,000; product costs were 74% of sales. 74% of the sales were on open account. 
5. Wages and salaries amounted to $11,684, of which $10,730 was paid. 
6. Paid $3,470 to suppliers for materials that X Company had previously purchased on account. 
7. Collected $3,666 from customers who had previously purchased products from X Company on account. 
8. Bought equipment for $81,100 with a down payment of $13,000 and a $68,100 loan from the bank.

Problem 1: What would total equities be on August 31? [Ignore adjusting entries.]

A: $101,137

B: $126,422

C: $158,027

D: $197,534

E: $246,918

F: $308,647

Problem 2: What would Net Income be for August? [Ignore adjusting entries.]

A: $8,387

B: $11,155

C: $14,836

D: $19,732

E: $26,243

F: $34,904